Medicaid 101Jul y 8, 2013

Presented by Senate Staff:Adriane Crouse

Marga HoelscherAdam Koenigsfeld

Interim Committee on Medicaid Transformation and Reform

1

Presentation Highlights

• Background and Overview• Missouri Medicaid • Services and Service Delivery Systems • Provider Reimbursement Levels• Financing and Budget• Hospital Reimbursement• Provider Tax • ACA and Federal Health Reform• Transformation Considerations

2

Background and Overview

3

What is Medicaid? Nation’s largest public health program for low-income

Americans

Medicaid is NOT Medicare Two separate programs with different federal rules and

regulations Different eligibility focus

Children Pregnant Women

Majority of Spending goes to Elderly and Disabled Long-Term Services and Supports

Nursing Homes Home and Community -based Services

4

What is Medicaid?• Medicaid is Considered an Entitlement

• Anyone meeting income and eligibility requirements can enroll

• Jointly Financed by State and Federal governments

• Federal law requires states offer a basic set of benefits

• Federal law requires certain groups of people to be covered

• Medicaid programs differ greatly from state to state

5

Federal and State Agreements• Medicaid State Plan

• Agreement between federal government and each state • Documents specifics regarding each state’s program• Covers specifics like: services, eligibility, provider reimbursement

and cost sharing

• Waivers• Necessary to innovate• Very difficult process

• Medicaid Partnership Plan• Specific to Missouri• Documents Provider Tax Requirements• Requires Missouri to submit Additional Documentation

6

Missouri Medicaid

7

Missouri Caseload as of May, 2013

532,100 Children

27,240 Pregnant Women

77,289 Low Income Parents

161,491 Persons with Disabilities

75,346 Low Income Elderly

*Additional 59,512 women receive limited services under Breast and Cervical program.

Total 873,466

8

9

In Missouri:• DSS is Single State Agency

• Designation required in federal law• Agency responsible for administering Medicaid State Plan

• MO HealthNet is state’s Medicaid agency

• Medicaid services also administered by • Department of Mental Health• Department of Health and Senior Services• Department of Elementary and Secondary Education

10

11

12

TOTAL MEDICAID ALL AGENCIES

FY 2014 Proposed

GR FED OTHER TOTAL

Elementary and Secondary Education $0 $1,000,000 $7,000,000 $8,000,000

Mental Health $356,799,977 $726,941,916 $32,385,406 $1,116,127,299

Health and Senior Services $234,605,038 $450,951,832 $485,831 $686,042,701

Social Services $1,194,009,324 $3,563,640,541 $2,407,772,614 $7,165,422,479

Total $1,785,414,339 $4,742,534,289 $2,447,643,851 $8,975,592,479

13

State Agencies & Medicaid

14

Quick Facts

Medicaid Management Information System - state mechanized claims processing and information retrieval systems

• 99.8 million claims processed in FY 12• Payments in excess of $8 billion• Average claim processing time is less than a day • Over 99% of claims submitted electronically• Over 41,000 providers of 68 different types• System applies 1000s of edits

15

Quick Facts

Pharmacy is an Optional Service available to all participants• 315,000 average monthly pharmacy users• 13.2 million claims• $1.16 billion budgeted for FY 14 • Is carved out of managed care contracts

Nursing Facilities is a Mandatory service for Medicaid programs• 23,387 average monthly users in FY 12• 8.3 million days provided• Average per diem rate in FY 12 was $138.37• Over 60% of occupied beds are paid by Medicaid 16

Provider Rates• 208.152 RSMo requires an annual parity study• Overall rate for SFY 2013 is 57% of Medicare

Program 2013 Rate as % of Medicare

Ambulance 40%

Audiology 45%

Dental 37% (UCR)

Durable Medicaid Equipment 86%

Optical 40%

Physician 59%

Rehabilitation Center Therapy 20%17

Clinical Management Examples

• Inpatient Pre-certification• Pharmacy

o Clinical Edits o Early Refill, o Dose Optimization

• Optical• DME Prior Authorizations• Psychology Prior Authorizations • Imaging Prior Authorizations• HCBS Assessments and Prior Authorizations• Psychology Prior Authorizations • Imaging Prior Authorizations• HCBS Assessments and Prior Authorizations 18

Eligibility

19

Source: Department of Social Services

20

2013 ANNUAL INCOME RATESPercent of Federal Poverty Level

Family Size18%

Annual Amount

85% Annual Amount

100%Annual Amount

138%Annual

Amount *

185%Annual Amount

300%Annual Amount

1 $2,068 $9,767 $11,490 $14,856 $21,257 $34,470

2 $2,792 $13,184 $15,510 $20,123 $28,694 $46,530

3 $3,515 $16,601 $19,530 $25,390 $36,131 $58,590

4 $4,239 $20,018 $23,550 $30,657 $43,568 $70,650

5 $4,963 $23,435 $27,570 $35,923 $51,005 $82,710

6 $5,686 $26,852 $31,590 $43,594 $58,442 $94,770

21

22

MO HealthNet Enrollees and Expenditures

In SFY-2012, seniors and persons with disabilities comprised more than 27% of enrollees, however, they accounted for nearly 66% of MO HealthNet expenditures.

Number of People SFY-2012(Average Monthly)

Persons With Disabilities 167,367Seniors 77,460Pregnant Women & Custodial Parents

108,325 

Children 540,824Total 893,976

*Data reflects Department of Social Services, Table 23, Medical Statistics excluding Women’s Health ServicesPersons with Disabilities include Permanently and Totally Disabled; Aid to the Blind; Blind Pension; Specified Low-Income Medicare Beneficiary; and, Ticket to Work Health Assurance Program (TWHAP)Seniors include Old Age Assistance; Qualified Medicare Beneficiary (QMB) and, Specified Low-Income Medicare Beneficiaries (SLMB)Pregnant Women & Custodial Parents include MO HealthNet for Families-Adult; Refugee; Women with Breast or Cervical Cancer; Independent Foster Care Children Ages 18-21; MO HealthNet for Pregnant Women (Poverty and Income); and, Presumptive Eligibility (Pregnant Women)Children includes MO HealthNet for Children; SCHIP (including no cost and premium enrollees); MO HealthNet for Families-Child; Foster Care; Child Welfare Services; Title XIX-Homeless, Dependent, Neglected (HDN); DYS-General Revenue; Children in a Vendor Institution; Missouri Children with Developmental Disabilities (MOCDD); Presumptive Eligibility for Children; and, Voluntary Placements

0%

25%

50%

75%

100%

60.5% - Children

25.2% - Children($1,762.1 M)

12.1% - Pregnant Women &Custodial Parents

8.7% - Seniors

17.4% - Seniors($1,218.6 M)

18.7% - Persons With Disabilities

48.5% - Persons With Disabilities

($3,398.0 M)

MO HealthNetSFY-2012

Percent of Enrollees(893,976* AverageMonthly Enrollees)

Percent of Expenditures($7,004.8 M)

8.9 % - Pregnant Women & Custodial Parents ($626.1 M)

Services and Service Delivery

24

Services

Mandatory• Physician, Nurse Practitioner, and

Nurse Midwife Services• Hospital Services–Inpatient and

Outpatient• Laboratory and Radiology

Services• Family Planning Services and

Supplies• Nonemergency Medical

Transportation (NEMT)• Federally-qualified Health Centers

and Rural Health Clinics• Comprehensive Access to Services

for Children (EPSDT)

Optional• Prescription Drugs• Eyeglasses, Prosthetic Devices• Case Management Services for

Specific Conditions

25

Service Delivery

Fee for Service

• Seniors• Persons with Disabilities• Children and Parents

outside Managed Care Counties

Managed Care

• Children and Parents inside Managed Care Counties

• $1.18 Billion budgeted for FY 12

State at Risk for Service Costs

Managed Care Plans are at Risk

for Costs of Services

26

27

Costs and Financing

28

Jointly Financed

• FMAP—Federal Medical Assistance Percentage• Regular FMAP: Generally based on per capita income • Statutory floor of 50%• Missouri’s regular match rate is 62%

• Enhanced FMAPs• CHIP is 73%• Promotion of Other Federal Priorities

• 100% FMAP for Electronic Health Records (EHR)• 90% MMIS/Technology • 75% Program Integrity

• Administrative Match generally 50%29

30

Provider Taxes• Defined in federal statute

• Must be broad-based and uniform

• Providers cannot be “held harmless” from the tax• Safe harbor rate of 6% of net patient revenue

• Nearly all states have at least one provider tax• Most popular:

• Nursing home• Hospital• ICF-ID 31

Provider Taxes Key in Missouri• Missouri has long standing history of provider taxes

• Missouri relies heavily on provider taxes to fund the Medicaid program

• Provider taxes fund state match for billions in payments

• Transformation recommendations must consider impact on provider taxes

32

Hospital Reimbursement

33

Hospital Reimbursement

Complicated Methodology Per Diem

• Based on 1995 Costs Trended to 2001 Medicaid Add-On Payments

• Makes up Difference Between old Costs and Today’s Cost• Paid for both Fee for Service and Managed Care Days• Upper Payment Level (UPL) Disproportionate Share Hospital (DSH)

Outpatient

Provider Tax funds about ½ of State Share of Payments34

FY 12 Inpatient and Outpatient Units of Service by Large Eligibility Groups

Inpatient Outpatient Total

Units % of Total Units % of Total Units % of Total

Total Custodial Parents 21,482 3.21% 1,313,844 9.57% 1,335,326 9.27%

Total Children 174,208 26.04% 1,656,130 12.06% 1,830,338 12.71%

Total Disabled 413,795 61.87% 8,370,648 60.96% 8,784,443 61.01%

Total Elderly 22,787 3.41% 1,730,777 12.61% 1,753,564 12.18%

Total Pregnant Women 36,609 5.47% 658,509 4.80% 695,118 4.83%

Grand Total 668,881 100.00% 13,729,908 100.00% 14,398,789 100.00%

Source: Table 23 Medical Statistics for FY 12

35

Disproportionate Share Payments (DSH)• DSH Payments are for Uncompensated Care

Subject to Federal Allotment Cap; and Subject to Hospital Specific Costs

• Federal Allotment Reduction under ACA 5% for first three years 15% for next year 50% thereafter

• Missouri’s FY 2013 DSH payments: $511 million hospitals $207 million DMH hospitals

36

Disproportionate Share Payments (DSH)

DSH Reductions written in the Federal Bill

• Secretary Determines Cut Formula based on:- Percentage of uninsured,- State’s use of DSH funds, and- State’s current DSH level

Federal Rule with Formula Issued in May

37

Why Increasing Medicaid Eligibility is Important to Missouri Hospitals?

• DSH Reductions Will Happen Both Medicare and Medicaid

• Many hospitals at Hospital Specific DSH Caps Unrelated to ACA

• Medicare DSH cuts Comparable to Medicaid

• Other Medicare Payments Impacted• Trend • Sequestration 38

ACA and Federal Health Reform

39

Allows Increase of Eligibility

• Under 65 with incomes up to 138% of the FPL

• Significant Eligibility Change for Missouri• Now: Parents up to 19% of the Federal Poverty Level (FPL)• No non-custodial adults unless seniors or disabled• Allows Medically Frail

• 100% federally funded for first three fiscal years (FY14-FY16).

• State share phases up to 10%:

- January 2017 – 5% (half year for FY 2017);

- January 2018 – 6%;

- January 2019 – 7%; and

- January 2020 – 10%40

41

MEDICAID PROJECTIONS NUMBER OF PEOPLE

115,685 115,685 115,685 122,626 129,567

124,032 132,572 141,112149,653

158,193

19,782 19,782 19,78219,782

19,782

0

50,000

100,000

150,000

200,000

250,000

300,000

FY2014 FY2015 FY2016 FY2017 FY2018

Parents Childless Adults Medically Frail

259,499 268,039 276,579292,061

307,542

Source: Budget & Planning

Transformation Considerations

42

Transformation Considerations

• Access• Quality • Sustainable Financing• Service Delivery• Personal Responsibility• Provider Reimbursement Levels• Eligibility Levels

• Appropriateness of Current Levels• Organization Structure to Support Transformation

43