Trends and Directions in Medicaid

1
Trends and Directions in Medicaid

• DHMH Retreat
• June 27, 2007
• Charles J. Milligan, Jr.

2
Preview

• Coverage
• Long-Term Care
• Federal Financing
• Federal Policy

3
Coverage
4
Medicaid Enrollment Has Grown Dramatically
Medicaid Eligibles, 1965-2004 In Millions
SCHIP enacted
Source The Kaiser Commission on Medicaid and the
Uninsured
5
For Poverty and Near-Poverty Groups, Medicaid
Growth Has Occurred as ESI Subsided
Source Holahan, J., Cook, A. (2005, November
1). Changes in economic conditions and health
insurance coverage, 2000-2004. Health Affairs Web
Exclusives, 24, Supplement 3, 498-508.
6
Medicaid can be a platform for covering the
uninsured, such as the Massachusetts Model which
expands Medicaid . . .

• Total Commonwealth Population

6,400,000

• Currently insured (93)
• Employer, individual, Medicare or Medicaid

5,940,000

• Currently uninsured (7)

460,000
-lt100 FPL
106,000
Medicaid Eligible but unenrolled

• 100-300 FPL

150,000
Premium Assistance
-gt300 FPL
204,000
Affordable Private Insurance
Note Based on August 2004 Division of Health
Care Finance statewide survey
7
. . . and uses a Connector for many people
above 100 FPL . . .
Insurance Connector
MMCOs
Blue CrossBlue Shield
Tufts
NHP
Harvard Pilgrim
New Entrants
Fallon
8
. . . but unsustainable Medicaid growth may lead
to disenrollment in times of tough state budgets.
Disenrolls individuals in optional and
expansion populations
TennCare split into 3 programs Conducts major
eligibility re-verification process
Sources The Kaiser Commission on Medicaid and
the Uninsured and CMS
9
Medicaid has moved toward tiered programs in
waivers . . .

• Design benefit packages and cost sharing that
  resembles commercial insurance, to reduce
  rational substitution into Medicaid
• DRA options
• 1115 waivers, where DRA wont work
• Marylands PAC program
• Utahs PCN program
• Others
• Use Medicaid financing to shore up ESI market, to
  prevent erosion
• Avoidance of Medicaid enrollment growth, by
  trying to help targeted employers and employees
  continue with ESI
• Requires an 1115 waiver

10
. . . and in a limited way under DRA benchmark
flexibility . . .

• Idahos Benchmark Basic (approved May 25, 2007)
• Standard Medicaid benefits, except excludes LTC,
  transplants, and intensive mental health
• Kentuckys Global Choices (approved May 3, 2007)
• Standard Medicaid benefits, except excludes LTC
• West Virginias Basic Plan (approved May 3, 2007)
• Covers most benefits, but limits some (e.g., four
  prescriptions per month). These limits waived,
  and the person is enrolled in the Enhanced
  Plan, if they sign a member agreement

11
. . . and is attempting to engage beneficiaries
more in notions of individual responsibility.

• States seeking to make consumers more actively
  engaged in purchasing decisions
• Many objectives for this
• Interventions in lifestyle issues use funds
  for non-health preventive services
• Encourage appropriate substitution of services
  (e.g., primary care instead of ER)
• Encourage appropriate use of less-expensive
  versions of the same service (e.g. generic drugs
  instead of brand-name)
• Create price competition among providers and MCOs
• Control Medicaid budget move from defined
  benefit to defined contribution model

12
Individual responsibility and lifestyle issues
raise public health themes inside Medicaid.

• West Virginia
• Kentucky
• Florida
• South Carolina
• Plus, individual mandates in coverage states

13
SCHIP Reauthorization will be a Congressional
focus this summer

• Key issues
• Limit to 200 FPL?
• Limit to children?
• Include funds for eligible but unenrolled?

14
Long-Term Care
15
States have worked to move financing into home-
and community-based services
HCBS Waiver,
21.2
SNF,
(61)
Source Burwell, Sredi, and Elken, 2005. Fiscal
year expenditures.
16
On average, Maryland approximates the US as a
whole, and promotes HCBS more than most states in
the region. . .
Source www.hcbs.org, CMS 64 Cost Reports,
Medicaid Long Term Care Expenditures, FY 2005
17
. . . in DD, Maryland spends a higher percent on
HCBS than the US average and all states in the
region . . .

Source www.hcbs.org, CMS 64 Cost Reports,
Medicaid Long Term Care Expenditures, FY 2005
18
. . . while for the aged and disabled, Maryland
is comparable to nearby states but spends a much
high on institutional-based services than the
national average.
Source www.hcbs.org, CMS 64 Cost Reports,
Medicaid Long Term Care Expenditures, FY 2005
19
Medicaid-financed residents of institutions
increasingly include the under 65 population.
20
Once Medicaid becomes a nursing home residents
payer, its often too late to transition the
resident to the community.
Source The National Nursing Home Survey
Discharge Data Summary
21
Dual eligibles represent 14 of Medicaids
enrollment, yet account for 40 of all Medicaid
spending.
Source Medicare Chartbook 2005, Kaiser Family
Foundation
22
. . . due to the lack of an extensive Medicare
nursing facility benefit, compared to other
Medicare benefits ...
23
Because Medicare serves as a clinical gateway to
Medicaid . . .
MedicareBenefits
MedicaidBenefits
Inpatient Hospital
InpatientHospital
65.4 of all nursing home admissions come from a
hospital.
Medicaid- Covered Outpatient Services
Physician
24
. . . states are looking at models to coordinate
care, using SNPs in mandatory programs . . .
State
Medicare SNP
Medicaid Side agreement
Medicaid MCO/SNP
Medicare Contract
Dual Eligible

• Potential elements of side agreement
• Data exchange
• Crossover claims and dollars
• Coordination of marketing, grievances, etc.

25
. . . and in voluntary programs.
Medicare
CMS
SNP
State
Medicaid
All Benefits

• Features
• Enrollee voluntarily selects SNP for both
• Single payment for all benefits
• Administration of all benefits
• Model agreement from CMS

Dual Eligible
26
Federal Financing
27
The federal government is cracking down on
perceived abuses in state Medicaid financing . .
.

• Provider Tax Reform The DRA (2005) eliminates
  FFP for state spending associated with provider
  tax on Medicaid MCOs. To qualify for FFP, tax
  must be broad-based applies to all providers in
  class regardless of Medicaid participation, and
  must have no corresponding credit or
  hold-harmless provisions. (Effective 2/8/06 GF
  10/1/09)

28
. . . through regulations and statutory changes .
. .

• Hold Harmless - CMS may have reduced its 6
  provider tax rate cap to 3 of net patient
  revenues, but TRHCA (2006) created a safe harbor
  at 5.5 of net patient revenue, effective 1/1/08
  to 10/1/11 (then 6). Discussing its proposed
  rule (FR 3/23/07), CMS specifies that tax rate
  within the applicable cap satisfies indirect hold
  harmless rule.
• GME, Cost limits, UPL. CMS proposed rule (FR
  1/18/07) bars FFP for above-cost payments to
  public providers, restricts IGTs/CPEs. Proposed
  rule (FR 5/23/07) eliminates GME from UPL, all
  GME from Medicaid payments. Congress passed the
  war appropriations bill 5/24/07, with rider
  blocking rules' implementation for one year.

29
. . . and by taking state initiatives hostage

• State plan amendments
• E.g. school-based financing
• Seek disallowances for previously-approved
  actions
• Refuse to issue specific guidance
• Approve new waivers with strings
• Renew ongoing waivers with strings

30
Federal Policy
31
Take-Up Of DRA Options Has Been Slow

• Benefit Flexibility Only WV, KY, FL, KS
• Cost Sharing Flexibility Only KY
• HCBS State Plan Option Only IA
• Cash Counseling Option Only AL

32
Possible Reasons for Low Take-Up

• Policy ramp-up time
• Permitted flexibility under DRA does not match
  with states policy goals, and an 1115 waiver
  still is needed
• States seek coverage expansions
• States seek more limited benefits, or higher cost
  sharing, or retention of federal funds, or more
  direct engagement with ESI market
• Drafting awkwardness in DRA. Examples
• Benchmark coverage only available for existing
  groups means removing benefits from current
  beneficiaries
• HCBS state plan option misaligns income and
  targeting
• Money Follows the Person difficult given length
  of stay

33
CMSs response to slow DRA take-up puts pressure
on states.

• Extreme reluctance to move new 1115s
• Heightened encouragement of states to adopt DRA
  options

34
Contact Information

• Charles Milligan
• Executive Director, UMBC/CHPDM
• 410.455.6274
• cmilligan_at_chpdm.umbc.edu
• www.chpdm.org