Health Care Reform:

1

• Health Care Reform
• The Patient Protection and Affordable Care Act
  (PPACA)
• Impact on Medicaid
• John G. Folkemer
• Deputy Secretary
• Health Care Financing
• May 6, 2010

2
Eligibility Changes

• Eligibility Maintenance of Effort (Effective
  March 23, 2010)
• Medicaid eligibility, methodologies, and
  procedures cannot be made more restrictive until
  Exchange fully operational (unless waiver
  approved by HHS due to budget conditions)
• CHIP eligibility, methodologies, and procedures
  cannot be made more restrictive until Sept. 30,
  2019
• State-Option to Expand Early
• Option to cover individuals in the new
  eligibility category (parents and childless
  adults to 133 of FPL) after April 1, 2010 and
  before Jan. 1, 2014
• States may also phase-in enrollment based on
  income during early expansion period
• Maryland currently provides full coverage to
  parents and partial benefits to childless adults
  to 116 of FPL

3
New Mandatory Benefits

• New Benefits
• Mandatory coverage of freestanding birth center
  services (effective March 23, 2010)
• Maryland already provides a higher physician or
  nurse midwife fee for births that occur in
  birthing centers (determining whether this meets
  the new requirement)
• Mandatory coverage of comprehensive tobacco
  cessation services for pregnant women in Medicaid
  (effective Oct. 1, 2010)
• Maryland already covers

4
Key Medicaid Pharmacy Changes

• Minimum Drug Rebate Changes (Effective Jan. 1,
  2010)
• Minimum drug rebate level increased for
  brand-name drugs (15.1 to 23.1) and for generic
  drugs (11 to 13)
• 100 of savings associated with rebates between
  15.1 and 23.1 for brand-name and 11 and 13
  for generics goes to the federal government
• Results in a revenue loss for the state
• Marylands average rebates are 32 of total drug
  expenditures, not including supplemental rebates
• MCO Rebates Changes (Effective March 23, 2010)
• HealthChoice MCO pharmacy benefits will now be
  eligible for federal rebate program
• 100 of savings associated with rebates between
  15.1 and 23.1 for brand-name and 11 and 13
  for generics goes to the federal government
• Results in additional revenues for the state

5
Key Program Integrity/Quality Provisions

• Requires states to establish contracts with one
  or more Recovery Audit Contractors by December
  31, 2010. These RAC contracts would be
  established to identify underpayments and
  overpayments
• Requires states to report expanded set of data
  elements under MMIS to detect fraud and abuse,
  includes data submitted on or after Jan. 1, 2010
• Requires states to use the National Correct
  Coding Initiative (NCCI) for Medicaid claims
  filed on or after Oct, 1, 2010
• 180 days after enactment (Sept. 18, 2010), HHS
  will establish procedures for screening Medicaid
  and Medicare providers
• HHS shall develop regulations prohibiting
  Medicaid payments for certain health-care
  acquired conditions (July 1, 2011)

6
New Demonstrations

• Incentives for prevention of chronic diseases in
  Medicaid
• HHS will award states grants starting Jan. 1,
  2011
• Monies targeted to programs that focus on
• Ceasing the use of tobacco products
• Controlling or reducing individuals weight
• Lowering individuals cholesterol
• Lowering individuals blood pressure
• Avoiding the onset of diabetes or improving a
  diabetics management of his/her condition
• Provide a health home to Medicaid enrollees with
  chronic conditions
• Authority granted through the state plan,
  effective Jan. 1, 2011
• 90 percent federal matching rate during the first
  8 quarters
• Planning grants also will be available (require a
  state contribution)
• Maryland has been developing a health home
  through the Maryland Health Quality and Cost
  Council

7
New Demonstrations

• Medicaid Emergency Psychiatric Care Demonstration
  Project
• Three-year demonstration, starting Oct. 1, 2011
• Up to eight states may be selected
• Participating states would be required to
  reimburse certain (non-public) institutions for
  mental disease (IMDs) for services provided to
  Medicaid beneficiaries between the ages of 21 and
  65 who are in need of medical assistance to
  stabilize an emergency psychiatric condition
• Pay bundled payments to hospitals
• Five-year demonstration, starting Jan. 1, 2012
• Focus on the use of bundled payments during an
  episode of care that involve a hospital stay
• Allow pediatric medical providers to organize as
  Accountable Care Organizations
• Five-year demonstration, starting Jan. 1, 2012
• Pediatric providers who meet savings targets will
  be eligible for incentive payments

8
Increased Incentives To Provide More Home and
Community-Based Services

• Community First Option (effective Oct. 1, 2011)
• Provides a 6 enhanced federal matching rate for
  personal care and attendant services
• Must meet nursing home level of care medical
  requirements
• State must maintain or exceed the preceding
  fiscal years spending for individuals with
  disabilities or elderly individuals
• Rebalancing Incentives (effective Oct. 1, 2011)
• Provides an enhanced federal matching rate for
  home-and community-based services to states who
  spend less than 50 of their total long-term care
  expenditures on HCBS
• Below 25 (5 percentage point increase in federal
  matching rate)
• Between 25 and 50 (2 percentage point increase
  in federal matching rate)
• States must increase the level of spending on
  HCBS over 4 years
• Extends the Money Follows the Person Rebalancing
  Demonstration from 2011 to 2016
• Maryland will need to apply in order to receive
  additional funding

9
System Planning Needs

• Significant system improvements are required
• Establish procedures for enrolling individuals
  who are identified by the Exchange as Medicaid
  eligible
• Establish eligibility web links to Exchange
• Must not require any additional information from
  individuals to enroll in Medicaid or the Exchange
• Must allow a transition period for individuals
  who are found ineligible for Medicaid due to the
  new modified adjusted gross income counting rule
• Must continue to make children eligible for CHIP
  who are found ineligible as a result of
  elimination of an income disregard
• Decisions need to made now to have systems ready
  by 2014
• Evaluate whether current plans for system changes
  are aligned with Health Care Reform
• Identify the need for new changes