2002 Medicaid Data for the State of Alaska

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2002 Medicaid Data for the State of Alaska
May 2003

• Muse Associates
• 1775 I Street, NW, Suite 520
• Washington, DC 20006
• 202-496-0200
• www.muse-associates.com

2
The 20 - minus 4 9.5 Problem

• Medicaid is 20 percent of an average states
  budget
• State revenues are projected to grow minus 4
  percent this coming year
• The Medicaid program is projected to grow 9.5
  percent this coming year (up from 5 percent
  through most of the 1990s)

3
Survey of Current State Medicaid Trends

• Survey Results
• While state revenues have been falling for 5
  quarters, Medicaid costs have continued to
  increase, leading to a shortfall in 40 states
  Medicaid budgets
• 49 states are making Medicaid cost containment
  plans to
• More controls on pharmacy costs
• Increased co-pays
• Eligibility restrictions
• Benefit reductions
• All states are seeking ways to increase federal
  share of Medicaid funding
• Outlook for 2004 is no better

Source Survey of all 50 states and DC done for
Kaiser Commission on Medicaid at beginning of FY
2003
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Medicaids Problem Periods in the Past

• Early 80s - Bottom falls out of economy,
  unemployed swell roles
• Solution Throw people off roles and cut
  provider rates
• Early 90s - Waxman mandatory groups kick in
• Solution Put children and mothers in managed
  care
• Early 00s Medical costs increased overall,
  general rolls up as economy slows
• Solution ??

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Finding Solutions to the Medicaid Program Problems
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What We Do

• Receive tapes submitted to the Centers for
  Medicare and Medicaid Services (CMS), deliver
  results and detailed backup in person in two
  weeks
• Goal is to identify what is driving the cost of
  the Medicaid program, and therefore, where are
  the greatest potential savings
• Outline the potential use of disease management
  and other policy options to improve patients
  health outcomes and save money

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State Medicaid Studies November 1, 2000 through
May 1, 2003
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Medicaid Recipients by Eligibility National
Totals
9
Alaska Medicaid Recipients by Eligibility Status
120,000
Total
100,000
80,000
Recipients
60,000
Children
40,000
20,000
Disabled/Blind
Age 65
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Fiscal Year
10
Medicaid Expenditures by Eligibility Status
National Totals
11
Alaska Medicaid Expenditures by Eligibility Status
12
Medicaid Expenditures by Type of Service -
National Totals
13
Alaska Medicaid Expenditures by Type of Service
Possible problem with historic data
14
Data from Alaska

• Data covers the period FFY2002-Q3 to FFY2003-Q2
• There were no claims for capitated payments in
  Alaska
• DRGs are not used in Alaska
• Prescription Drug Claims data only 83 of
  claims have valid NDC codes rest of claims use
  other codes
• 30 of primary diagnosis codes are missing in
  Other claims
• For Long Term Care Claims 38 are for nursing
  facilities, and 62 are for inpatient mental
  health facilities (no ICF-MR in data)

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Total Expenditures by 3 Digit Primary Diagnosis
for All Datasets by Amount Paid
Hospital stays, transportation, case
management, waivers, etc.
16
Big Three
17
Alaska Medicaid Fee for Service 2002 Summary
of Primary Diagnosis Data for Selected Conditions
Unduplicated These are underestimates due
to non-DRG codes in hospital data set.
18
Distribution of Alaska Costs for Those with
Asthma, Diabetes, Heart Failure

• Top 10 of recipients (934) cost 81.7 million
  (10.8 of all dollars) and averaged 87,447 per
  recipient (other states ranged from 31,956 to
  56,345 per recipient)
• Inpatient hospital costs used 22 of the
  expenditures for this group

These are underestimates due to missing
diagnosis codes in data set.
19
Examples of Possible Controllable FFS
Expenditures for Asthma in Ambulatory Patients
2002

• 9.7 million in Inpatient Hospital expenditures
• 1.3 million in Outpatient Hospital (ER, MRI
  centers, etc.) expenditures

20
Relative Costs of Medicaid Recipients with Mental
Illness and Selected Chronic Illnesses Total
Annual Expenditures Per Person

• Mental No Mental
• Illness Illness
  Diagnosis Diagnosis
• Asthma 21,842 7,934
• Diabetes 34,121 16,666
• Heart Failure 50,236 29,534

Highest averages observed in any state to date.
21
HMOs are using targeted disease management for
high cost cases Illustration is from Take Your
Medicine HMOs are using a new service to manage
their sickest patients by Daniel Eisenberg Time
Magazine, Your Business section, August 2001
22
More on Distribution of Costs for Top 200
Medicaid Recipients

• Top 200 recipients cost 50.1 million and
  averaged 250,512 per recipient (other states
  ranged from 121,921 to 344,843)
• Inpatient hospital expenditures are 37 of this
  groups cost in Alaska

23
Alaska - Top 10 of the Larger Hospitals with the
Highest Proportion of Septicemia or Complications
- 2002
24
Expenditures for Persons with 9 or More
Prescriptions in 180 Days (this slide is missing
17 of prescription drug claims)

• 12,213 total persons with 316 million in total
  expenditures
• 64 million in prescription drug expenditures
• 11,343 non-institutionalized persons used 258
  million of total expenditures
• Represent 16 of all ambulatory patients
  receiving prescription drugs
• These patients used 34 of total expenditures
  for all ambulatory patients

• Since analysis was missing 17 of prescription
  drug claims, and analysis confined to one year,
  these are significant underestimates

25
Expenditures for Persons with 20 or More
Prescriptions in 180 Days (this slide is missing
17 of prescription drug claims)

• 2,098 total persons with 81.8 million in total
  expenditures
• 21.5 million in prescription drug expenditures
• 1,923 non-institutionalized persons in this group
  used a total of 71.4 million or 9 of total
  Alaska Medicaid expenditures
• These patients represent 2.7 of all ambulatory
  patients receiving prescription drugs (other
  states range from 0.3 to 5.2)

• Since analysis was missing 17 of prescription
  drug claims, and analysis confined to one year,
  these are significant underestimates

26
Florida Intensified Benefit Management (IBM)
Program for Persons with 20 or more Prescriptions
in 180 days
The IBM program was able to produce cost savings
for each intervention, including a 44 reduction
in the PUPM (per user per month) for therapeutic
duplication targeted recipients. Medicaid
Prescription Drug Spending Control Program Annual
Report , State of Florida Agency for Health Care
Administration, Jan. 2002, p. 23.
27
Alaska - 2002 Prescription Drug Expenditures by
American Hospital Formulary Service (AHFS)
Classes by Amount Paid
28
2002 Prescription Drug Expenditures(in millions
of dollars)

• Group Dollars Percent
• Aged 16.2 17.1
• Blind/Disabled 53.4 56.3
• Children 12.8 13.5
• Other Adults 11.7 12.4
• Unknown 0.7 0.7
• Total 94.7 100.0

Other states ranged from 55.5 to 68.4
29
See also Use of Conventional Antipsychotics
and the Cost of Treating Schizophrenia, by Ramon
R. Lyu, Jeffrey S. McCombs, Bryan M. Johnstone,
and Donald N. Muse. Health Care Financing
Review, Winter 2001
30
The Institutionalized Population

• Long Term Care (LTC) Facilities Inpatient
  Mental Health Facilities

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2002 Expenditures for Long Term Care Recipients

• 930 Residents (63.5 aged) Cost
• Type of Provider Millions Percent
• Nursing Homes 61.8 81.0
• Inpatient Hospital 3.8 5.0
• Prescription Drugs 4.3 5.6
• Physicians 2.7 3.5
• Clinic 0.7 0.9
• Home Health Agency 0.2 0.2
• Hospital Outpatient 0.7 0.9
  Other 2.2 2.9
• Total 76.2 100

32
Long Term Care (LTC) Facilities

• 930 Medicaid patients in LTC
• Approximately 28 facilities
• Average cost per patient per
  year is 81,987.

33
30 Days

• Persons with 9 or more unique prescriptions in
  30 days
• 453 (49) of LTC patients had 9 or more
  prescriptions
• These persons had 3.3 million in prescription
  drug expenditures
• 6 facilities had more than 50 of their patients
  with 9 or more prescriptions (excluding
  facilities with
• Persons with 20 or more unique prescriptions in
  30 days
• 42 (4.5) of LTC patients had 20 or more
  prescriptions (other states range from 0.3 to
  11)
• These persons had 521,030 in prescription
  drug expenditures

• Since analysis was missing 17 of prescription
  drug claims, and analysis confined to one year,
  these are significant underestimates

34
Indicators of Nursing Homes with Potential
Problems

• Indicators developed in technical consultation
  with
• American Medical Directors Association
• American Health Care Association
• Long Term Care Pharmacy Alliances

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General Indicators of Nursing Homes with
Potential Problems

• What we look for
• High percentage of residents taking 20 or more
  prescriptions at the same time
• High percentage of residents taking one or more
  of 19 modified Beers list medications
  (always,rarely)
• Zhan, C, et.al., JAMA 286, Dec. 12, 2001, p.
  2823-9.

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Indicators of Alaska Nursing Homes with Potential
Problems

• Of the 28 total homes
• 7 homes had residents taking 20 or more drugs at
  the same time
• 4 homes had more than 25 of residents taking
  Beers list medications
• 2 homes had both indicators

• Since analysis was missing 17 of prescription
  drug claims, and analysis confined to one year,
  these are significant underestimates

37
2002 Expenditures for Inpatient Mental Health
Care Recipients

• 1,332 Residents Cost
• Type of Provider Millions Percent
• MH Facilities 51.4 68.5
• Inpatient Hospital 2.7 3.6
• Prescription Drugs 2.5 3.3
• Physicians 3.7 4.9
• Clinic 8.7 11.6
• Hospital Outpatient 0.8 1.0
  Other 5.3 7.1
• Total 75.0 100

38
Research on Inpatient Mental Health Care
Facilities

• 1,332 Medicaid patients in Inpatient Mental
  Health Care Facilities
• Approximately 34 facilities
• Average cost per patient per
  year is 56,337.

39
Potential Over / Under Utilization of Mental
Health Medication
Please note that 17 of prescription drug
claims could not be used for this analysis.
40
Overview of Analysis

• Mental health related protocols from
  Comprehensive NeuroScience, Inc. were applied to
  State XYZs data
• Focus on medications used to treat mental health
  to identify mental health patients
• Based on published clinical literature

41
2002 Baseline Information

• 114,590 fee-for-service Medicaid recipients
  during 2002
• 19,484 patients (17 of all fee-for-service
  patients) received a prescription with a mental
  health indication during 2002
• 3,985 patients (20.5 of those receiving mental
  health medication) received a prescription for an
  atypical product

42
Key Finding 1 Potential Ineffective Dosage

• There were 929 (4.8 of those receiving mental
  health medication) patients that were prescribed
  an atypical at an ineffective strength. This
  represents 23.3 of patients who received an
  atypical medication. Industry experts indicate
  that this wastes money and is not helpful to
  treating recipients.

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Key Finding 2Potential Discontinued Usage

• There were 1,450 patients (7.4) with severe
  mental illness that did not refill their
  prescription for their atypical anti-psychotic.
  This represents 36.4 of patients who received an
  atypical medication. Significant concern with
  respect to future hospitalizations,
  ER visits, etc. for these
  patients.

44
Key Finding 3Potential Overlapping Medication

• There were 2,178 patients on 3 or more
  overlapping behavioral medications during 2002.
  This represents approximately 11.2 of recipients
  who received a prescription drug with a mental
  health indication.

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Key Finding 3 Potential Overlapping Medication
(contd)

• 222 patients (1.1 of those receiving mental
  health medication) were concurrently on more than
  one SSRI during the year. Patients should not
  generally be on more than 1 SSRI at a time
• About 6.5 of patients taking atypicals received
  two or more of this type of drug at the same time
  during the year. Patients should not generally
  be on more than 1 atypical at the same time

46
Third Generation Investigative Tools

• Applied Correct Coding Initiative(CCI) developed
  by CMS to database
• Two Areas
• Compound Code Violations
• Incompatible Code Violations

47
Examples of Compound Code Violations Upper
GI Endoscopy, Biopsy

• CPT 43239, Upper GI Endoscopy, Biopsy and CPT
  00740, Anesthesia, Upper GI Visualize should not
  be billed separately and should be bundled as
  part of the endoscopy procedure. Approximately
  30,584 was paid for these codes in 2002 .
• Hundreds of pairs of codes
• In Alaska possible coding violations were 0.07
  of total expenditures for physician services

Lowest percent observed to date
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Mutually Exclusive Code Violations

• The CCI identifies CPT codes that should not be
  billed together on the same day.
• For example, CPT 74150, cat scan of the abdomen,
  CPTs 74160 and 74170, contrast cat scans of
  abdomen cannot be billed together on the same
  day. However, 12,511 was paid for this type of
  violation during 2002 in Alaska.
• In Alaska possible mutually exclusive code
  violations were 0.15 of total expenditures for
  physician services

Lowest percent observed to date
49
Analysis of Federal Medicare Prescription Drug
Benefit

• Medicare is the primary payer to Medicaid
• Modeled our analysis of an Rx benefit on the
  Thomas bill
• Total Alaska prescription drug expenditures
  94.7 million
• Approximately 41 of Alaska prescription drug
  expenditures are for dual eligibles (38.5
  million)

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Summary of Possible Recommendations

• Case management of high-cost recipients
• Special case management of high-cost mental
  health recipients
• Persons with 20 or more prescriptions in 180 days
  should be examined
• Explore reasons for relatively high per capita
  for institutionalized patients

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Other Options

• We are running other options for Alaska
• Other options requested by the state will be
  produced