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Joint | February 10, 2015 | Committee Room | Health and Human Services

Full MP3 Audio File

Ladies and gentlemen, I'd like to call the first meeting of the Appropriations Joint HHS Committee to order and we'll take care of our housekeeping, first of all introducing the people that help make us almost run on time, but run smoothly. Our sergeant at arms from the House, Reggie Sills, Marvin Lee, Ray Cooke, Terry McCraw. And from the Senate we have Canton Lewis, Marcus Kitz. Thank you all very much and today our pages are Amanda Padden from Orange County and her sponsor is Representative Graig Meyer. And Carrie Rough, who's sponsor is Representative Mike Hager. Thank all of you for your help and service to us today. Well, good morning and welcome. The first day of what is going to prove to be a rough journey, I'm sure, based on previous history and how things have gone. But I think we've got a good crew all the way around, from the Representatives who are going to be held responsible for whatever we do in here, and for a great staff who has proven themselves mightily with all of our ups and downs and rounds abouts and I will give you a great big thanks to start off with. What I'd like to do this morning in introducing the committee is kind of make it a little personal and as I ask the various members, starting with our chairs, to introduce themselves I'd kind of like a little bit of an explanation of why they asked to be here. Because, in essence, we all did. This isn't a committee that you get appointed to and don't scream and holler and ask to be moved. So we came voluntarily and for a purpose and I'd like, personally, to find out what some of those are from the members of the committee and I'd like to start with Senator Tucker. [SPEAKER CHANGES] Thank you, Madam Chair. In my case, I was drafted but I had been on the Health and Human Services Committee for three or four years now and I'm certainly interested in what goes on here. It is a difficult committee to try to ascertain all the complexities of healthcare. My area of focus would be foster care and childcare, I mean child protective services, and we've made a commitment to that last time, out of last year's budget, but certainly overall we try to provide good healthcare for those that are less fortunate than us. Thank you. [SPEAKER CHANGES] Senator Pate. [SPEAKER CHANGES] Thank you, Madam Chair. It's a pleasure to share the dice with you and the other co-chairs. This is a very important subcommittee, as we all know. I served four terms in the House and during that time I was on education appropriations. So when I came over to the Senate I thought that would be exactly where I ended up. Little did I know at the time that I was going to be assigned to Health and Human Services, but it has been a learning process. I still don't know all the acronyms. I've got the one letter acronyms down pretty well pat right now but the two letter ones and three letters and above are sort of difficult for me right on. But seriously, this is a very important function that we do. There's a lot of fussing and fighting, as the co-chair said, and I look to her to be the referee. But some of the most important work we can do in this General Assembly is to serve the citizens, especially those who are living in poverty and do not have adequate healthcare. That's what medicaid is all about and we have to find a way to make Medicaid responsive to the needs of our citizens and also an efficiently run organization within our state. Thank you. [SPEAKER CHANGES] Representative Brisson. [SPEAKER CHANGES] Thank you, Madam Chair, and all. This is my ninth year on Health and Human Services and the reason I take so much interest in Health and Human Services is I represent Bladen, Sampson, and a portion of Johnston County and a high poverty, and lower than poverty level families, high numbers

would average probably close to 28% below poverty level and the children in my district average around 35% living under poverty level. So it's very important to me to look after the children and the elderly folks that ?? made all the sacrifices for us to get where we are today. That's very important to me. Make sure that our rural hospitals survive and provide the care the citizens of North Carolina need in rural areas. Thank you. [SPEAKER CHANGES] Thank you. Representative Dobson. [SPEAKER CHANGES] Thank you, Madam Chair. I will just echo some of the comments that have already been made but it's an honor for me to be a part of this committee and to be co-chair of this committee. Two reasons really, first I enjoy learning about healthcare. I enjoy the process. I enjoy talking to people and listening and learning and reading and studying, and it's something that I've just enjoyed doing up to this point. Also, I'm concerned about rural healthcare in particular. I represent three very rural counties in Western North Carolina and I'm committed to preserving and protecting rural healthcare in areas such as mine and those are really the two reasons that I'm excited about this committee. Again, thank you for the opportunity and I look forward to serving with all of you. [SPEAKER CHANGES] Representative Malone. [SPEAKER CHANGES] Thank you, Madam Chair. I'm Chris Malone, House 35, right here in Wake County and unlike Senator Tucker, I volunteered. I have family members who have dealt with issues such as Medicaid, mental health issues. I've seen some of it firsthand. I have a passion for it. I know that this is very important to all of us here at the state and thought it would be something of import that could leave some lasting good for a lot of people and that's why I joined. Once again, thank you for the opportunity, I look forward to working with everybody. [SPEAKER CHANGES] Thank you. Representative Pendleton. [SPEAKER CHANGES] I'm Gary Pendleton. I represent parts of Wake County and I volunteered for this committee. I used to serve on Wake Med board of directors and I just developed a passion for looking after people, trying to help people that can't help themselves. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] Thank you, Madam Chair. I'm Verla Insko, house district 56, Orange County. I'm a little bit like Senator Tucker. My first year here in '97-'98, I was on the Education Appropriations Committee and was asked to move to Health and Human Services because there were not very many people who were engaged in that. I'm a former health program administrator at the UNC School of Medicine and I have a science background so it was a really good match for me and I really have enjoyed being here. It really is, I think it's holy work that we do and I'm especially interested, I've done a lot of work with mentally ill, developmental disabilities, and addiction disease people and also Medicaid and I have a special interest in early childhood education. I just really am committed to getting our children ready to go to school and I think the first thousand days, the first three thousand days are the most important with regard to that. Thank you. [SPEAKER CHANGES] Thank you. Representative Farmer-Butterfield. [SPEAKER CHANGES] Thank you, Madam Chair. I have worked in Health and Human Services since 1972 and did volunteer work all of my life in this area, seems like. I worked at the local regional and state levels and now with the non-profit. My emphasis has been on the intellectually development disabled, mental health, and substance abuse. I have a passion for the aging and a passion for guardianship and early intervention. [SPEAKER CHANGES] Thank you. Representative Earle. [SPEAKER CHANGES] Good morning. I'm Beverly Earle. I represent District 101 out of Mecklenburg County and I have served on the Health and Human Services Appropriations for all of my 20 years and I look forward to continuing to do. I have a great passion for working with epople and in my previous world

worked for the phone company, which was entirely different, but I am pleased to be here and have one of those social service mentalities that you think you can change the world. But, anyway, I look forward to serving with everyone, including Senator Tucker. [SPEAKER CHANGES] Thank you. Senator Robinson. [SPEAKER CHANGES] Good morning, and thank you Madam Chair. It looks like I'm the lone senator over here today. But my interest, like some of you, has been about 40-plus years working in the area but I've worked all the way from elderly to children with developmental disabilities to people with substance abuse and currently I still work with folk to provide access for folks who have HIV and AIDS, sickle cell, diabetes, a lot of chronic health conditions. So my concern and my interest has been around making sure that there's early intervention for folks, especially those in poverty and those are uninsured, who don't access health services, that they could be healthier and more productive if they had the health on the front end and I chair the Health Services Board, which was the first community board for health services in Guilford County and the ?? as one of those founders for people who are in the gap as well, too. So I have a broad interest in terms of making sure we provide access to healthcare for people who can't afford and can't get it themselves. [SPEAKER CHANGES] Thank you. I guess I should kind of give an excuse for the Senators. They have Finance meeting, concurrent with this committee meeting. So you may see them run back and forth or they'll show up a little bit later. I am Marilyn Avila. I represent House District 40, which is here in Wake County, and like Representative Insko I have a science background but had totally different expectations of how that would be utilized when I came to the general assembly and Health and Human Services was not on my radar screen until I expressed an interest in the mental health issue, and voila, here I am. Like Senator Tucker, my emphasis is a lot centered on our children, and primarily because for every life saved and every life put on the right track, we got less social issues later on in every area, in crime, in people who are dependent on the government for subsistence, just a whole gamut of ills can be eliminated and avoided by putting our children on the right track. So I'm particularly interested and worked quite heavily with foster care adoption system and have taken a great interest in the mental health system in North Carolina, which has been shortchanged for a number of years with bad implementation of very good intentions. We are struggling to save that population by being able to give them the access that's been mentioned, as well as the quality that's critical at all phases and for all issues in their lives. I just want to personally thank all the members of the committee because I know how emotional this committee can get, when the choices we have to make sometimes can have effects on peoples lives that we'd really rather not, but circumstances can limit just how much we can do and I want to thank all of you ahead of time and say that I'm going to enjoy working with you and would love any suggestions and every minute of your experience put forward in this committee. Thank you starting out and I'm looking forward to it. The first thing I've been asked to do is to go over the subcommittee guidance and I am not going to insult the intelligence of a very smart committee and read this to you. You will notice that you do not have a notebook on your desk. We are not going to accumulate. We're going to have you just take each meeting's paperwork and do with it is you wish. The one thing I have requested, though, is for staff to bug all of our

Senators as nicely as possible to get all of our presentations in early so that we can have it on the website so you will have a chance to look at it as soon as we can get it posted prior to the meeting. Sometimes that will help you do a little research ahead of time, clarify your questions and maybe eliminate some questions, so if those of you in the audience plan to be presenters at any point in time, get it in early and pass the word. Thank you. Now I will have miss Debra Landry, Fiscal Research, go over our team assignment area. [SPEAKER CHANGES] Thank you, Madam Chair. Members of committee in your handouts today you do have a sheet of paper that has health and human services team assignments. I'm not gonna read the whole thing to you but I am gonna talk a little bit about how we're organized. The staff for this committee is sitting here in front of you. We do have members from the fiscal research division, the bill drafting division and research division. We're basically assigned by division within the Department of Health and Human Services. When you look at this sheet, the first person listed for each division is the primary research analyst for this division, the second person would be the backup and then you'll have legislative thereafter and research as appropriate for each division. Just to point out some changes that have occurred for those of you who've been on the committee for a while. We have one less member from the bill drafting division, so Judifret Hummand from the research division will be assisting in that area during this session, also health choice has been moved from Steve Odwin as being the primary contact for fiscal to myself as being the primary contact. That concludes our report. [SPEAKER CHANGES] Thank you. The other thing you might've noticed is we have not asked Miss Landry to come forward in the past as we have done in the past in making presentations, but it was a little awkward for her to try to talk into the microphone when somebody behind her's asking a question, so we figured it would be better if they faced us as they were talking and they probably don't feel like an ant under a microscope either at the same time. Now we're going to have the committee presentation schedule presented by Susan Jacobs from fiscal research. [SPEAKER CHANGES] Good morning Madam Chair, Members of the committee. Members of the committee. Susan Jacobs, fiscal research division. I have a presentation for you this morning is two parts. We'll talk first about the committee schedule and then we'll get into a brief budget overview. The first section will be the committee schedule and it's actually a little bit, it's more actually then a committee schedule. Last week staff met with the subcommittee chairs and discussed a new plan. If you've seen the subcommittee guidance, they're asking us to do something different this time. For people who've been on the Appropriations, either Health and Human services or any other Appropriations Committees in the past you know in the long session typically what happens in that is we do a lot of counting for you. We talk about division by division how big the budget is, how many people are served, what kind of programs they have, and we do these overviews for you for each division so that it's a general education of each program. We'll tell you that we believe that has not worked well for Health and Human Services for a budgeting strategy and we want to try something new for you this long session and the chairs have approved for us to do that. Now hopefully we're not gonna fail because if we do they're not gonna give us the opportunity again and so what we wanted to do first of all is talk about what would be the session strategy for this committee this session and what we came up with and the chairs have signed off on was shifting from paying for to investing in, and that is this committee has not only $5 billion that you focused on historically in the past of the appropriated general fund money, which we'll talk about when we get to the budget overview, but almost $19 billion in total funds in Health and Human Services is what you have to invest in Health and Human Services programs for the next two years in the state of North Carolina. So what we'd like you to do is consider this as you would an investment portfolio and not just considering how you want to spend this money but what it is you expect to return, what it is you expect these programs to provide for you based on how much you're willing to invest in these programs, so it is a change and we will be trying to focus on long term policy issues that in the long term would impact your spending in Health and Human Services

But it would require a change in the way you think about budgeting for Health and Human Services. So, this is a statement from the Robert Wood Johnson Foundation and will set the stage for what it is we’ve been talking about. America, not just North Carolina—so this is a problem nationally, it’s not just in North Carolina—America spends twice as much on healthcare than any other nation. You would expect, since we spend more, that we would have the healthiest people in the world, and we do not. So research indicates that spending on healthcare to treat people may actually come as an expense because you’re investing in treating rather than investing in public health. The question is not only how much are you spending, are you spending your funds on the right kinds of programs, or is there an opportunity cost associated with the fact that you’re spending too much money on treatment and not enough money on prevention? And the next, when we get to the plan you’ll see that we have invited several guest speakers to talk to you in the beginning about how North Carolina stacks up. And we want to know how our outcomes in this state compare to the nation, how we compare to our surrounding states, and how we compare in this state county by county. We need to know how we stack up so that we can figure out where it is we need to make progress, so that’s where we’ll begin when we get to the outline of where we’re going. Just some general statistics, North Carolina ranked 14th nationally in overall per capita healthcare expenditures in 2009. Now this is bigger than just Health and Human Services, this is as a state so it’s bigger than just the department, it’s bigger than the 20 billion dollars that I talked to you about, it’s for all sources of funds. It would be the state employees’ health plan, it would be other insurance companies, it is for healthcare in general in the state. We ranked 14th in overall per capita health expenditures. For public health expenditures we spent $51 per capita compared to $94 per capita in 2009. So on average states spent in 2009 $94 on public health-related programs in 2009; North Carolina spent $51. This will also be important as you hear your presentations from the School of Public Health in a few weeks. They’re actually beginning next week. North Carolina ranked 43rd in the country in public health spending at $50 per capita compared to the national average of $90 per capita in 2014. Our health outcome ranking in 2014 is 37th in the nation and was 35th in 2013. So while those are major and very broad statistics to give to you this morning, it sets the stage for questions you need to ask as we move forward in this committee to what kinds of programs are you funding and what kind of outcomes are we getting and why are we 37th in the country if we are, in total expenditures, not that far off the mark compared to the country. Is it not only how much we are spending in North Carolina but what we are spending the funds on? So this is just a map showing you the data that we talked about for 2014 and how much North Carolina of its per capita expenditures is actually going to public health expenditures and we are in the bottom range for all states. So as we move forward and we begin to evaluate programs we have set out some key questions for you and there are many questions that you want to consider. Here are some that we’ve laid out and that is, what outcome would you require for the investment you are making? We know that there are many good programs for Health and Human Services. Unfortunately you are limited to about 19 billion dollars. You do not have sufficient resources to fund all the good programs. And as you move forward and as your population grows, as the number of children in the state grows and pressures to fund other items including education or other JPS programs grow, the pressures on that 20 billion dollars continue to increase, and so you have to figure out how to prioritize programs and to figure out which ones are giving you the biggest return on your investments and are the greatest investment for the state overall. Are resources being targeted for the right purpose or program and does that purpose fit with the overall goal of the agency? Does the program produce positive evidence-based outcomes? We are also going to invite someone from the Pew Center in here, who is a think tank who goes into states and helps them think about new ways to budget based on evidence policy-making decisions, and we’ll talk about that in a few minutes. Is there an alternative that would yield a better result for the state overall? And I think this is one of the most difficult decisions faced by p…

policy makers, particularly in Health and Human Services. It's difficult to find a program in Health and Human Services that is not benefiting some individual somewhere in the state. The question is, when you consider the funding for that program, is there an alternative that would be a better investment in that state dollar? That's what you have to weigh in Health and Human Services if you're going to apply this methodology and move from a payment to an investment. Is the program adequately or inadequately funded? During the past few years you've had to make reductions based on the targets that you've received. This year you'll get a new target at some point, either House or Senate, and we'll have to help you reach that target again. You'll need to look at programs. If a program has been reduced to the point of ineffectiveness, then you have to make a decision about whether that program should continue or whether you should invest those funds in a different program that would yield a better result. Of course there could be other committee requirements as well. Now, where do we want to start with you in this long session? We know that this is overwhelming. Health and Human Services serves a lot of people. It serves older adults, it serves disabled, it serves children, and so for this session we wanted to figure out where to start and start small and so we want to focus this session on children ages from birth to five. One reason why that's important is access to care. So there's been a debate, we are all aware of the expansion debate about Medicaid, whether to expand Medicaid or not expand Medicaid. Well this would not be a debate for children ages from birth to five because North Carolina has covered children birth to five either through the Health Choice Program or through Medicaid up to 200% of the federal poverty level for several years. So for that age group, access should not have been as a big of an issue as it would have been for other populations. So, at least for that population, we should be able to talk about other quality programs rather than simply access to care. So, given that new strategy, we have laid out a series of planned meeting topics. This does not mean this is how many meetings we'll have on each topic. So you can't really assume that each of these topics will correspond with one meeting. Some of these topics will take a series of meetings. The first couple of meetings will be business sort of meetings that we have to take care of things that we take care of every year. Today's meeting, of course, is the organizational meeting and the DHHS overview. The meeting tomorrow will be the secretary and her staff and she'll come over and talk about their goals and priorities for the next biennium. We'll also get a status update on the implementation of historical budget items and legislation during the past two years. We've had a lot of questions about where the department is on implementing things you've passed the past two years in the last two budget bills and so we have sent the department a spreadsheet to fill out and to let the committee know what the status of that legislation is. According to the subcommittee guidance that Representative Avila mentioned to you earlier, you are directed, or the full chairs wanted you to take a look at program evaluation division reports and we have two, one associated with the ADATC's and one for child support enforcement. So we have two of those reports that we will look at and that will take care of everything prior to getting into talking about setting the stage for outcomes. We have invited the school of public health and you see three meetings where they'll set the stage for North Carolina outcomes. We've asked them to start with the big picture and talk about all populations, moving from all populations, comparing us to the nation, to surrounding states, county by county, if they have county data, and then move from all populations to children birth to age five. Then particularly looking at birth weight and infant mortality. We will then have someone from the PEW Center come in and talk about their Results First Initiative, where they have gone into, I believe now, 16 states and we have John ?? here today if you have specific questions, who has worked with that center on that initiative some. They have agreed to come in, I think they'll be here March 3rd is the plan. Now, after we talk about the new way or the way we would like to suggest that you begin thinking about budgeting for Health and Human Services, which is evidence based, we're going to talk about how North Carolina pays providers. So we'll lay out a new policy and then we need to talk about the way they're currently being paid, and Steve has prepared a presentation and he'll talk about how North Carolina providers are paid. That may take up to two meetings. After he does that overall presentation, we're going to talk about medical payments, particularly Medicaid payments, for pregnant women and infants and a cost analysis of high-risk deliveries in pre-term births. All this

Ties together. So we’ve talked about outcomes. We’ve talked about how North Carolina compares, we’ve talked about how North Carolina compares birth weight, infant mortality. Medicaid pays for more births in the state of North Carolina than any other insurance program, and that’s true for most states. Why is it important for, why do we need to be looking at outcomes? Because we need to improve outcomes because Medicaid’s going to pay for them. So if you want to improve your Medicaid budget or reduce your Medicaid budget long-term, for deliveries, then you need to be looking at improving your outcomes for your infant mortality rates. We’ll continue on with our public health evaluation of prenatal and perinatal programs and programs focused on reducing infant mortality. That’ll take probably three to four meetings, to look at all the public health programs focused on kids, children birth to five. And then we will have guest speakers and allow you time to ask experts on how North Carolina can improve birth outcomes through evidence-based practices and we’ll invite a guest speaker for that. We’ll also try to find another state who has actually successfully done this and invite them to come in and speak to the committee as well. We will wrap up after we finish the public health component, and have committee discussion and see if you have specific recommendations for staff for additional research or work, or if there are specific recommendations you’re willing to consider jointly at that point. After we finish the public health component of the birth to age children we will move into the family support programs for children ages zero to five. That will be Debra, and she will talk about the social services programs and that’s the child welfare. That’s the Pre-K programs. It’s bigger than just public health. It’s family support programs for the overall wellbeing of children ages from birth to five. After we finish those meetings, we believe that will take about five meetings, we’ll through the same process. We’ll invite guest speakers in here. We’ll try to invite other states who have been successful in improving their family support programs as well. And we will then have a staff wrap-up and committee discussion when we finish that plan. Madame Chair, that completes my presentation on what the plan is for the committee schedule for the long session. [SPEAKER CHANGES] Thank you. At this time, let’s [INAUDIBLE] I’d like to have any questions. I know this is kind of a surprise out of the box, because we are shaking things up a little bit which I don’t think in general is ever a bad idea because ruts can be a very bad place to get. Because you don’t look around and see where you’re going, you just move ahead like you’ve always done, so Senator Robinson? [SPEAKER CHANGES] Thank you Madame Chair, and thank you for, I’m excited about the approach. Because I think prevention is so key. So I like the shift. I hope it works. The, one of the things that I wanted to know and you’ll probably have to answer it later, at the beginning you talked about us being 37th in health outcome rankings. I’d like to know what’s that based on? You know, what kind of indicators are there in terms of North Carolina being 37th and you can do that later, but I [SPEAKER CHANGES] Senator Robinson, I actually have the link to that report on that slide, and I will be happy to post that entire report to the committee. It has each state’s indicators and what the overall report’s based on and the link. But I’ll post the report as well as the link to the website. [SPEAKER CHANGES] Senator Berringer. [SPEAKER CHANGES] Thank you Madame Chair. I concur with Senator Robinson. This is bold, this is courageous. Because as you said there’s not hardly a program out there that doesn’t benefit someone and change is difficult. We have in today’s world the ability to measure outcomes and we’ve got to make sure as the health and human services trustees that every dollar is invested in the very best way it can. I have still a couple of basic questions. I want to make sure that I’m understanding, on this very telling sheet where you’re showing our rankings as 14th in our spending and our paying but then our outcomes being much, much lower than that, when you use the word public health expenditure as opposed to healthcare expenditure, could you explain that just a little bit more so that we can understand? I have an idea of what it is but I want to make sure I’ve got my head around it. [SPEAKER CHANGES] Madame Chair, Senator Berringer, yes so this is coming from two different reports. The first national for the healthcare expenditures is coming from the CMS and from Kaiser, where it talks about expenditures for, this is not just health and human services, not the public health nor the other. It is for state-wide.

A question I guess for when we do our public health presentation. We'll make sure we can have that included and know the breakdown of actually where all the different funding streams are. I think she actually referenced that in her presentation. Are there any additional questions before we move on to the next section? Senator Tucker? SPEAKER CHANGES Thank you ma'am. ?? in the rankings for states and expenditures. What impact did the Affordable Care Act have? Is those dollars included in on this 2014 ranking? Because if other states had expansion, they would have had more dollars to spend in 2014. So my point being is that those numbers in there? SPEAKER CHANGES I'm not sure Senator Tucker. I can go back and check and see if that was. I didn't see that. It was not specifically listed as one of the indicators. Children In Poverty is listed as one of the indicators. But I didn't see that the Affordable Care Act was spelled out but I'll go back and check and see. SPEAKER CHANGES Okay. Now Terry just an additional question or two. First of all you see how that could skew it as far as North Carolina's spending goes. Is this, I don't know, lack of a better term, but what we're doing here and I think Madam Terry can answer this. Is this stating 2 agencies that resent us for expenditures evidence-based outcomes that needs to be included in the presentation package and if it's omitted, to be able to tell whether or not the program is effective or not or compare? SPEAKER CHANGES I'm gonna have to ask you to repeat that. SPEAKER CHANGES We're talking about evidence-based outcomes. Representative Insco talked about return on investment. We are looking at where to re-invest our dollars, not cut our dollars but re-invest in more effective programs. Would those agencies that are presenting to this committee for funding, will they include in all of their packages their return on investment or outcome-based evidence that we can see how effective their programs are? Do you understand that? SPEAKER CHANGES I will defer to Ms. Jacobs but I don't know that the agencies are gonna be presenting the evidence bases. Really it's gonna be the program exactly how, separate of an agency overall report. If you could clarify that for Senator Tucker I'd appreciate it. SPEAKER CHANGES Madam Terry and Senator Tucker, John could potentially help me with this question but I believe when the presenter comes in here to do their presentation they'll tell you that that is potentially one of the recommendations that could come from this committee. I believe as part of their investment, their results-based initiative, that's one of the requirements of programs that they have to have that information available for members before they get any funding. If that's not part of the request, having that evidence-based data is part of the requirement to get any funding. I will defer to John. He probably has more information on that than I do. SPEAKER CHANGES Madam Terry, Senator Tucker, typically agencies have not been required to keep this kind of information. And it is a substantial departure from the usual way of doing budgeting. I think you understand that and the committee's directive on that is pretty clear. But what agencies can give you, probably they measure units of service, particularly if they're paying by unit of service, which is what we do in Medicaid. What's difficult for agencies is to tell you after you make that payment so what? So what happens? There are generally 2 conditions you're trying to address in these social service programs. One is either you're trying to increase the supply of something, make somebody better by giving them more, for example like nutrition, or you're trying to decrease a malady like disease, or the incidence of rate of accident or child abuse or whatever it might be. And as Representative Insco pointed out, the difficulty agencies have sometimes is measuring their ultimate outcomes, which is what I think the public policy ought to be. And that is, how, so if you do all of this long-term are we any better off? And it's very difficult for agencies to do that. A, because they've never really been required to do it. And the second thing is difficult but as Senator Barons pointed out it's

A question I guess for when we do our public health presentation. We'll make sure we can have that included and know the breakdown of actually where all the different funding streams are. I think she actually referenced that in her presentation. Are there any additional questions before we move on to the next section? Senator Tucker? SPEAKER CHANGES Thank you ma'am. ?? in the rankings for states and expenditures. What impact did the Affordable Care Act have? Is those dollars included in on this 2014 ranking? Because if other states had expansion, they would have had more dollars to spend in 2014. So my point being is that those numbers in there? SPEAKER CHANGES I'm not sure Senator Tucker. I can go back and check and see if that was. I didn't see that. It was not specifically listed as one of the indicators. Children In Poverty is listed as one of the indicators. But I didn't see that the Affordable Care Act was spelled out but I'll go back and check and see. SPEAKER CHANGES Okay. Now Terry just an additional question or two. First of all you see how that could skew it as far as North Carolina's spending goes. Is this, I don't know, lack of a better term, but what we're doing here and I think Madam Terry can answer this. Is this stating 2 agencies that resent us for expenditures evidence-based outcomes that needs to be included in the presentation package and if it's omitted, to be able to tell whether or not the program is effective or not or compare? SPEAKER CHANGES I'm gonna have to ask you to repeat that. SPEAKER CHANGES We're talking about evidence-based outcomes. Representative Insco talked about return on investment. We are looking at where to re-invest our dollars, not cut our dollars but re-invest in more effective programs. Would those agencies that are presenting to this committee for funding, will they include in all of their packages their return on investment or outcome-based evidence that we can see how effective their programs are? Do you understand that? SPEAKER CHANGES I will defer to Ms. Jacobs but I don't know that the agencies are gonna be presenting the evidence bases. Really it's gonna be the program exactly how, separate of an agency overall report. If you could clarify that for Senator Tucker I'd appreciate it. SPEAKER CHANGES Madam Terry and Senator Tucker, John could potentially help me with this question but I believe when the presenter comes in here to do their presentation they'll tell you that that is potentially one of the recommendations that could come from this committee. I believe as part of their investment, their results-based initiative, that's one of the requirements of programs that they have to have that information available for members before they get any funding. If that's not part of the request, having that evidence-based data is part of the requirement to get any funding. I will defer to John. He probably has more information on that than I do. SPEAKER CHANGES Madam Terry, Senator Tucker, typically agencies have not been required to keep this kind of information. And it is a substantial departure from the usual way of doing budgeting. I think you understand that and the committee's directive on that is pretty clear. But what agencies can give you, probably they measure units of service, particularly if they're paying by unit of service, which is what we do in Medicaid. What's difficult for agencies is to tell you after you make that payment so what? So what happens? There are generally 2 conditions you're trying to address in these social service programs. One is either you're trying to increase the supply of something, make somebody better by giving them more, for example like nutrition, or you're trying to decrease a malady like disease, or the incidence of rate of accident or child abuse or whatever it might be. And as Representative Insco pointed out, the difficulty agencies have sometimes is measuring their ultimate outcomes, which is what I think the public policy ought to be. And that is, how, so if you do all of this long-term are we any better off? And it's very difficult for agencies to do that. A, because they've never really been required to do it. And the second thing is difficult but as Senator Barons pointed out it's

Possible to do that, but short term outcomes, you know, in this discipline you don't always have to defer and say well, we don't know. We'll have to wait 10 years. If you've got a smoking cessation, for example, you've got the number of people who successfully complete the program. That's the initial outcome. Then you've got an intermediate outcome on how many of your people who successfully completed are tobacco free after six months, after two years and how many of them are permanently tobacco-free, and if agencies are given the opportunity and told well, look, try to look at it this way. Don't be too fearful of being held accountable for that long term outcome. Find some outcomes that you can measure with what you're doing right now and so far it's been my experience in a number of states that agencies, when the General Assembly tells the agencies we expect you to keep up on that, to provide it to us and we'll be asking questions about it, they'll do it and, but the opposite is true. If they're able to get funding year in and year out without that it sort of inoculates them against accountability over time and this is a very, very serious thing that you're talking about here because there's so much money at risk and so much at stake, but all of this is possible, Madam Chair, and this is great for what it's worth as a staff person, this is very good. [??] [SPEAKER CHANGES] Just one more comment. Madam Chair and in the planning meeting stated we're not talking about so much cutting something as much as we are looking at programs and reinvesting in those programs. That's the goal and certainly to be able to make that decision on what you may not fund to full capacity as you have in the past simply because you haven't had an outcome, but if we can find out what those outcomes are, we may make a decision to fund something for so. Like child/infant mortality rate. Representative Insko mentioned public health. Well, with children and public health, infant mortality rate, public health on a local level's key for mom's wellness visits and medications and how she goes to make sure we don't have premies or acute deliveries. So, I mean, we may want to ship more money over to that area and take it away from some other area that's not as effective. Those are the things we're talking about here with the $19 billion is what we have and what we can reinvest in what program that's effective, and that may ruffle some feathers along the way, but I think we're doing our fiduciary responsibility to the committee and to the state, to the citizens to do that. Thank you. [SPEAKER CHANGES] I've got a long list, but I'd like to interject a point here that I think I keep hearing and that is the fear that in moving to this new approach we're gonna take away to give to somebody else. That is not the objective. It is going to be difficult. They might have to get used to a new program. They might have to get used to a lot of different things, but my hope and I hope the direction that this new way of looking at how we spend our money is going to be is that no one suffers and everybody is better off by what we're doing and I've got a long list. I'm gonna move along to Senator Hise. [SPEAKER CHANGES] Just real quickly to confirm this and I apologize for being late. I got double booked with finance downstairs this morning and that's why we're in this wonderful sized room so it's coming through, but just wanted to follow up on a comment I caught coming in. We're talking about being ranked 14th nationally in the nation on spending in healthcare spending and others. It's my understanding that that's a per capita expenditure and would so be irrelevant to the population of the state or to others, that per person we are spending one of the highest costs in the state, so if we have 2 million versus a state that has 100 thousand, we still have a higher cost in coming into those. Just wanted to clarify that to make sure it is a per-capita expenditure we are comparing. [SPEAKER CHANGES] Yes, sir. Okay. [SPEAKER CHANGES] Senator Barringer. [SPEAKER CHANGES] Thank you, Madam Chair. I'd like to follow up to Senator Tucker. He made a very, he used a very important word and it's fiduciary. I consider us on this committee, I think the highest of all the fiduciaries in the state

state of North Carolina because the Health and Human Services Appropriation Committee spends the money for those who generally cannot speak for themselves, that do not have advocates, and we have that fiduciary obligation to invest in things that work and we now have the opportunity to measure the things that work. To the staff person's point about this can be done, I do know too that agencies subcontract with many other social service organizations who now do have evidence based outcome data and in choosing the delivery system for those types of services, that needs to be part of the equation. Not that we're going to stop providing the service or cut someone off but we need to make sure that when we're investing in something it's the best of our ability, our fiduciary obligation is fulfilled, that those programs will work for those citizens, and that's my position. [SPEAKER CHANGES] Representative Pendleton. [SPEAKER CHANGES] Yes, this is not anything new. For the last five years medical insurance companies have been mandating to hospitals that they do just this. That they have to prove that their outcomes are in line. You can't do heart surgery on somebody three times and expect to keep getting paid by the insurance companies, and that's what were talking about. Another thing, but I was a Wake County Commissioner, we helped start some non-profits that treated alcoholism and drug abuse and what we found out in the last few years, I've been going about 18 years, but in the last few years those non-profits are treating people for these two conditions at about $0.29 on the dollar versus Wake County Government employees doing it. But the outcomes are running about 90% versus Wake County Government, about 30%. So the outcomes are what matters. Totally that's what matters. We've got to get to this and we can't accept excuses from HHS that they can't do it because, if hospitals can do it and small non-profits can do it, they can do it too. [SPEAKER CHANGES] Senator Pate. [SPEAKER CHANGES] Thank you, Madam Chair. For the four years I've been on this committee, we've concentrated the vast majority of our efforts on Medicaid and what to do about Medicaid and of course it is a very vexing problem and we're going to have to continue along those lines. However, in concentrating on Medicaid all the time, we've not been able to pay any attention whatsoever to other healthcare products that the department is responsible for and other than just a passing report or two, we don't really get the information we need and we don't know what the outcomes are for those other parts of the department. So I think we're embarking on something now that will certainly be a lot of work to it because Medicaid is not going away, but looking at these other programs as equally as important, I feel like because of the value that it has to the people we're trying to serve. So I think this is a program for us to be on. [SPEAKER CHANGES] Are there any other questions from committee members? Senator Robinson. [SPEAKER CHANGES] Yes, thank you Madam Chair. I wanted to kind of echo in on evidence based practices because if any of you have participated in federal programs for a long time, they have for a long time been based on evidence based practices and still are. I mentioned to Senator Barringer one of the pastor programs in North Carolina is baby love plus that focuses on infant mortality but also focuses on spacing pregnancies, the health of the mother, and then preparing and putting in place those support systems that will result in healthier babies, infant mortality reduction, and it has, as well as preparing that mother to be self sustaining. So if you look at another program we've had, in terms of penicillin and reducing infant mortality for children with sickle cell that started years ago, North Carolina was modeled because it said if you started a baby who had sickle cell disease on penicillin at two months of age and continued to two years, and that took both finding that child, linking them to medical care, and following up, it reduced infant mortality. That was evidence based, and it's worked. So I think that we

Models. We just have to look through the system and see what we need to do to have the best outcomes. [SPEAKER CHANGES] Representative Ensco. [SPEAKER CHANGES] Thank you Madame Chair, I’d just like to follow up on that issue. We don’t have to do the research ourselves. I don’t think that that’s a good use of our money. There’s plenty of evidence, plenty of research that’s been done on all kinds of social programs. Ron Haskins recently had an article in the New York Times about programs that work and Nurse Family Partnerships was one of those which is Baby Love here. So what we need to do is to make sure that we have fidelity to the model, because a lot of times what we do is fund a program but we don’t put enough money into it to do it like the research said, “This is the way you do it to get good outcomes.” So this, I think we forget sometimes to look at whether or not we’ve actually, we’re actually following the model. If we follow the model, we should expect the same kind of outcomes that was in the research. [SPEAKER CHANGES] Senator McKissick. [SPEAKER CHANGES] I apologize for coming in late, ?? Senate Finance at the same time. I guess my question is kind of procedural in nature since I missed part of the presentation. If this question was answered, I apologize for re-answering, or re-asking it. But is it envisioned that once we go through this process and do this thorough analysis, that we will go back and do a similar analysis each year or how will we use the data once compiled and incorporate it into this particular budget cycle, to use as a comparative basis for what we do in future years? I mean are we coming up with something that’s going to be an annual, thorough analysis and review or is this intended to be one that will just establish the benchmarks that we’ll use for evaluation in the future? [SPEAKER CHANGES] My view, and I’ll have staff or whomever correct me if I’m wrong, but I think this is actually the first step, since we’re dealing with the zero to five age children, of a process of how we look at every aspect of funding within our system HHS. As Senator Pate said, we spend a lot of time talking about Medicaid which is a large portion of HHS, but there are a lot of other people in the state. There’s another eight million people that get health care through different sources, and as Representative ?? referenced, we have forces, insurance companies and such, beginning to impact how this is handled in other areas because they’re asking for outcomes. And as a scientist, I know that with any objective, if you can’t measure what it is that you’re trying to accomplish, you might as well not start, because you won’t know if you’ve ever reached your objective because there are small steps that you can measure similar to what Mr. Turcott referenced in smoking cessation. You don’t start something and then just have this huge earth-shattering result at the end. They’re always small, incremental steps that you can look at to judge “am I going in the right direction,” and not necessarily say “no stop it” but then ask yourself, “well it doesn’t seem to be doing what we want, can we adjust it?” because our objective is still legitimate. It’s how we’re going about it that’s our issue. So I have, don’t have any other hands at the moment, unless you’ll stick it up real fast. And I will ask a question of Ms. Jacobs in part with the time left, will we be able to complete your second part? [SPEAKER CHANGES] We should probably wait. [SPEAKER CHANGES] Wait? Okay. We will then hold off on continuing with her overview presentation, and now I’ll just open the floor to any general questions that the committee might have, or comments or suggestions. Senator Tucker? [SPEAKER CHANGES] Just one question. Mr. Owen, we are what, February 10th because my 35th anniversary was yesterday so I know what day it is, are we or do we know whether we are having a good or bad or over or under budget year with Medicaid from the department? Do we know that

that number today. We're getting toward the fourth quarter and it's always helpful for us to have some sort of idea and we have had a firm coming in for some $8M dollars and do accounting and spread sheets and try to track that for the department. Have you communicated with the department and do we have a number? Are we on budget or not? [SPEAKER CHANGES] Senator Tucker, members of the committee, the last formal document we have was the last presentation we've done and we saw in this room. We know that they are preparing a forecast for the governor's budget. We are hopeful that we'll get something in the next few days from them. We know that they're working, that's their priority right now, of course, is the governor's budget as they work to get something over here to the General Assembly. Steve meets with them every week on their forecast and where they are. I do not believe they are projecting a shortfall at this point. So they are still anticipating being on or under budget, I believe. But we don't have any actual, more formal numbers, than what you've seen previously in your oversight committees at this point. [SPEAKER CHANGES] Any other comments, closing remarks, questions? Mr. ??. [SPEAKER CHANGES] Madam Chair, the Program Evaluation Oversight Committee request the state auditor to conduct a financial statement audit of HHS as a department. There had never been, well there haven't been in probably more than 20 years, a financial audit of that department. Of course, HHS's other large departments are included in the comprehensive annual financial report, which is audited, but what this will do, it will show you, as of June 30, 2014, what the financial position was of HHS and every program. That audit is due sometime in mid-March and it should be helpful in identifying cash-wise, accrual-wise, and liabilities versus assets where you are or where you were as of June 30, 2014. So that's about to come out. [SPEAKER CHANGES] Thank you. For those of you who came in late, we started the committee meeting by having everyone introduce themselves and I ask if you wouldn't mind sharing a couple of comments regarding why you're on this committee, whether you were sandbagged or volunteered or whatever the case might be and I don't want to miss those of you who came in late. So I'll start with Senator Hise. [SPEAKER CHANGES] Thank you, Madam Chairman. Senator Ralph Hise, I represent the 47th district, Western North Carolina. I think I was sandbagged three years ago, the kind of thing where they don't let you out once you come in, which is coming. This has been one of the most interesting and bumpy rides in all of state government during that time period. I tell people that when you start counting the total of the number of phone calls you've received that cost the state more than $70M dollars that appear within a 24-hour period of holes, it's never dull and never boring. I think we've made some good steps and progress over the past years to begin to shore that up but I also believe we have a long way left to go before we have those kind of things and I look forward to being part of the process again, so thank you. [SPEAKER CHANGES] Senator McKissick. [SPEAKER CHANGES] Senator Floyd McKissick of the 20th Senatorial District, which includes Durham and Granville Counties. I have an absolute interest in Health and Human Services. I think it's a fascinating area. It comprises a substantial portion of our budget as a state and obviously some of the issues that we've dealt with over the last two years in particular have been quite profound. Medicaid, one being a significant driving force in shaping and forming what we do in terms of other allocations. Issues related to the roll out of NCTracks and the challenges there in terms of getting payments made in a timely way. Looking at NC Fast, looking at food stamp re-certifications, and the like. There have been a lot of issues we've addressed and tackled. I really appreciate the professional staff that we have working for us within HHS as well as our physical staff. They've done a great job in terms of keeping us up to speed. They may not always agree with those at the state budget office and within the agency but it's a good cross-fertilization

?? of ideas and opinions that I benefit from substantially as a member. [SPEAKER CHANGES] Senator Barringer [SPEAKER CHANGES] I'm Tamara Barringer I represent the 17th district which is southern Wake county. My background is corporations and taxation. I practiced law in a large law firm and then I built a law firm with my husband for about 20 years and managed it. I'm now a professor at the Kenan-Flagler business school in the master of accounting program for my 12th year. So I hope I look younger than I really am. But you're supposed to laugh at that part. My true passion and the reason I serve on this committee is foster care. My husband and I served as therapeutic foster parents for the Methodist home for children for 10 years and that experience changed not my life but his life and the children who were in our homes. I discovered then that our foster care system is broken. It is not functioning. It is a foster care system incentivized to keep children in foster care as opposed to adopting them into healthy, safe and loving families and I'm here to watch the money that gets invested in these children to see if we can't make that better for those 10,000 plus children and for all the children across the state on North Carolina and I appreciate this opportunity. [SPEAKER CHANGES] Senator Wells [SPEAKER CHANGES] I'm Andy Wells from the 42nd senate district that's Catawba and Alexander counties. My background over the last 30 years has been in real estate. So I like working with money and this seems to be one of the biggest pots so I actually volunteered. I also like puzzles I spent 5 years over on Hillsborough street picking up 2 engineering degrees and that included 5 semesters of calculus and differential equations just to see if I could do it and this seemed like a similar kind of a project. We spending a lot of money that should be helping a lot of people. I want to make sure we're giving the help where it needs to go and we're not taking the money away from the people that don't need to be losing it in the process. [SPEAKER CHANGES] Thank you and Senator Wells if there had been a third calculus course there would be no chemistry degree hanging on my wall. It was rough let me tell ya. I really appreciate all the participation and questions and I am very excited about the new direction that we're taking. My heart always beats a little faster when someone uses the term evidence based because as a scientist and as a logical person which I was told years ago coming down here that didn't work, but I fought hard I'm still trying to use logic in what I do down here. I really feel like we have an opportunity to make some dramatic and significant changes for the better for the health of all the citizens of North Carolina and I really appreciate the team that we've put together both the legislators and staff. I feel like with a lot of discussion and good ideas meeting back and forth and working it out with facts and figures it will come to the end with some successful direction to take and if there is no further business before the committee we stand adjourned.