GOVERNMENT OF THE DISTRICT OF COLUMBIA Executive Office of the Mayor ke ag = Office of the City Administrator The Honorable Tommy Wells Councilmember, Ward 6 Council of the District of Columbia 1350 Pennsylvania Avenue, NW, Suite 408 Washington, D.C. 20004 July 29, 2009 Dear Councilmember Wells: ‘As you consider the Mayor's Proposed FY 2010 budget for the Child and Family Services Agency (CFSA), I urge you to proceed cautiously. Your concems regarding Medicaid claiming for child and family services are both founded and appropriate, especially given the magnitude of the financial problems facing the District. However, adjustments to the Mayor's Proposed CFSA. budget could have unintended but harmful consequences on services for children and jeopardize our ongoing negotiations with federal partners. ‘The Mayor proposed an FY 2010 budget for CFSA that includes less reliance on Medicaid reimbursement compared to the FY 2009 budget. This letter highlights three reasons for the Administration’s proposed budget and plan to reform Medicaid claiming, First, and most importantly, this proposed budget was developed to ensure that services to children are maintained in a fiscal environment where local funds are increasingly scarce. In the proposed FY 2010 budget, a combination of local funds, recovery act funds, and Federal grant payments from Title IV-E will offset reductions in the Medicaid intradistrict funds to CFSA, because the Mayor must ensure uninterrupted services to children. CFSA and the Department of Health Care Finance (DHCF) are working diligently to finalize a sustainable Medicaid billing practice. Until that methodology is finalized, reducing CFSA’s local budget threatens to undercut the viability of children’s services by prematurely basing program budgets on Medicaid reimbursements that are by no means guaranteed. Second, as we discuss our Medicaid disallowances with our federal partners at the Centers for Medicare and Medicaid Services (CMS), the success of our conversations is contingent upon the District's immediate and ongoing plan to comply with Federal and local laws and regulations. ‘The District has demonstrated its aggressive response to the January 2009 internal cost audit reports by: 1) acknowledging prior flawed Medicaid billing practices; 2) immediately ceasing billing Medicaid once problems were identified; and 3) committing to not begin billing Medicaid until a fully compliant methodology has been adopted. Prematurely relying on Medicaid reimbursement could send the wrong signal to our federal partners and put the District at greater financial risk for more than six years of disallowances at CFSA and the District of Columbia Public Schools,Finally, CFSA’s methodology for FY 2009 claims is distinctly different from a reformed methodology for FY 2010. Basing an FY 2010 Medicaid reimbursement forecast on FY 2009 claiming is an approach that ignores the challenges we are facing in FY 2010, and I encourage ‘you to tread cautiously as you project any Medicaid reimbursement beyond the Mayor's proposal. In conclusion, the Mayor's proposed FY2010 budget was developed after analysis of completed and in-process internal cost report audits, which revealed that Medicaid claiming for CFSA. requires thorough reform given the gravity of potential disallowances. I trust that you will approach any revisions to our proposal with the same thoughtful and careful consideration. Sincerely, Ly e Wei o- Neil O. Albert City Administrator Ce: Council Chairman Vincent C. Gray Councilmember Jack Evans, Chair Pro Tempore Councilmember Yvette Alexander ‘Councilmember Marion Barry. Councilmember Muriel Bowser Councilmember Kwame Brown Councilmember Michael Brown Councilmember David A. Catania Councilmember Mary M. Cheh Councilmember Jim Graham Councilmember Phil Mendelson Councilmember Harry Thomas Jr. Dr. Natwar Gandhi, Chief Financial Officer