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Medicaid: Structure, Financing and Challenges

Lynne Perrin

Network Manager, Community Health Partners

May 16, 2014

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Who are we- the Short Version

Community Care of North Carolina

Community Health Partners – Serving Gaston and Lincoln Counties

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Community Care of North Carolina A statewide organization that is under contract

with the North Carolina Department of Health and Human Services/Division of Medical Assistance to manage the Medicaid population

A network of primary care medical homes/ practices supported by nurse care managers and pharmacists to keep Medicaid costs down and quality of care up

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QualityCosts

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Managing Care of Medicaid Recipients

Recipients are enrolled in Carolina Access II at the Department of Social Services

Recipients select a Carolina Access II primary care/medical home provider

Claims data/utilization data helps identify recipients with chronic illnesses and other health conditions that need professional intervention and management

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Managing the Medicaid Costs Primary care approval for specialty care Disease management (asthma, diabetes, COPD) Medication management and use of lower cost

drugs, identification of med errors Transitional care program to prevent hospital

readmissions – we are in the hospitals Patient education and intervention to prevent

further health problems Behavioral health coordination

And other evidence-based initiatives

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Place logohereTopics for Today

1. Medicaid overview and benefits2. Service utilization, history, trends and

expenditures3. Medicaid and long-term care financing4. Controlling costs5. Medicaid managed care and Community

Care of NC

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Medicaid – Overview and Benefits

Place logohereMedicaid – What is it?

Medicaid is a health insurance program for certain low-income individuals

Medicaid is jointly financed by the states and federal government

It is an entitlement program – if one is eligible, one gets the benefits

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Place logohereState Medicaid Agency

The NC Division of Medical Assistance within the NC Department of Health and Human Services is the designated state agency that works with the federal Centers for Medicare and Medicaid (CMS) to:

Establish eligibility standards Determine benefits and services Set payment rates to service providers

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NC LegislatureGovernor

Pat McCrory

State Budget OfficeArt Pope

Dept. Health and Human Services

Secretary Aldona Wos

Division of Medical Assistance – Dr. Robin

Cummings

Other DHHS Divisions – Mental Health, Social

Services, Public Health, Aging

Office of Medicaid Management

Information System (NCTRACKS)

Other State Departments and

Cabinet Secretaries

Community Care of North Carolina

Contract

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NC Division of Medical Assistance (DMA)

DMA DirectorDr. Robin Cummings

Financial Services (rates, cost reporting,

forecasting and budgeting)

Clinical Policy (medical criteria, prior approvals, pharmacy,

key clinical staff

Program Integrity (identifies fraud and

abuse)

Recipient and Provider Services (eligibility, provider

enrollment)

73,000 providers

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Place logohereMedicaid

Authorized by Title XIX of the Social Security Act of 1965

Each state administers its own Medicaid program“If you have seen one Medicaid program,

you have seen one Medicaid program” All states agreed to participate in Medicaid by 1982 The federal Centers for Medicare and Medicaid

(CMS) monitors the states and the federal requirements

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Mandatory Services

Hospital services EPSDT: Early and Periodic

Screening, Diagnostic, and Treatment Services

Nursing Facility Services Home health services Physician services, Rural

health clinic services, Federally qualified health center services

Laboratory and X-ray services

Family planning services, Nurse Midwife services

Pediatric and Family Nurse Practitioner services

Transportation to medical care

Tobacco cessation counseling for pregnant women

Place logohereOptional Services

Prescription Drugs Clinic services Physical therapy,

Occupational therapy, Speech, hearing services

Respiratory care services

Podiatry services Hospice Case management

Optometry services Dental Services Prosthetics Eyeglasses Chiropractic services Private duty nursing

services Personal Care Durable Medical

Equipment

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Waiver Programs/Services(Long-Term Care)

CAP/DA – Community Alternatives Program for Disabled AdultsCAP/C – Community Alternatives Program for Children (medically fragile)CAP/MR/DD for the Developmentally Disabled

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Place logohereNC Medicaid – A Snapshot

Medicaid recipients – 1.5+ million people in NC Total NC Population is 9.8 million (1 in every 6 ½ people are on

Medicaid)

Total Medicaid Expenditures - $13.6 Billion Total State Requirements - $3.46 Billion

Federal Medical Assistance Participation Rate (FMAP) for 2014 is 63%

State Share is 26% Other share is 11% (ex. drug rebates)

Over 73,000 providers bill Medicaid for services

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Mostly a Fee for Service Delivery System Medicaid pays the providers a fee for service

(FFS) based on rates set by the Division of Medical Assistance Note: The LME/MCO’s get a per member per month

payment and then they pay their providers according to a contractual arrangement

Note: Program for All – Inclusive Care for the Elderly – pmpm per enrollee from Medicaid and Medicare (managed care)

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Service Utilization, History of Spending and Trends

Place logohereExpenditures

The Medicaid funds go for: Hospitals – $1.9 Billion

Disproportionate Share (DSH) Payments to Hospitals ($450M)

Physicians – $1.2 Billion Nursing Facilities – $ 1.1 Billion Drugs – $1.2 Billion Other Claims - $5.7 Billion Other provider payments - $1.6 Billion

92% of the Medicaid funds go for paying claims from health care providers.

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4 Drivers of Medicaid Spending

1. Eligibility - Who is covered2. Benefits - What services are covered3. Fees – How much is paid for

services4. Utilization – How many services are

used by the covered individuals

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A Small Portion of Beneficiaries Are Responsible for a Disproportionate Share of Costs

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Adults

Children

Aged Blind Disabled

Duals

62%

28%

Adults

Children

Aged, Blind & Disabled

Duals

Beneficiaries Costs

Adults

Children

Aged, Blind & Disabled

Duals

(Medicare & Medic-aid)

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FY 2002-03 FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 $-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$2.0 $2.0 $2.4 $2.5 $2.6 $2.9 $2.8 $2.3 $2.5 $3.0 $3.1 $0.4 $0.4

$0.5 $0.5 $0.4 $0.2

$4.8 $5.9

$6.6 $6.6 $8.1

$8.3 $8.9 $9.2 $9.5 $9.5

$8.5

$0.7 $1.0 $0.8 $0.5

$0.6 $0.5 $0.5

$1.2

$0.5

North Carolina Medicaid Spending Trends

Appropriations County ARRAShortfall Receipts Supplemental Payments

From: NC General Assembly – Fiscal Research DivisionBudget Shortfall

Rate of Spending for NC Medicaid Claims is Low

Nationally, NC leads the country in controlling the growth in Medicaid claims spending.

Total Medicaid claims spending in NC has seen only a modest rate of growth (2.3%) since FY 2008 – lower than the 4.5% annual growth rate in enrollment.

Since 2008, Medicaid is serving more people at a lower cost per person.

But, more can be done to improve outcomes and quality while keeping costs low.

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Increases in NC Medicaid Claims Spending Have Grown at a Lower Rate Than Other States

NC AL MS FL GA KY SC TN VA0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

FFY 2002-2011

FFY 2006-2011

FFY 2008-2011

Only state where growth rate de-clined over all three periods. 2.3% average growth rate since 2008

States employing 3rd party commercial managed care plans for Medicaid (Medicaid MCOs); * MS began implementing an MCO model in 2012.

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2007 2008 2009 2010 201180%

90%

100%

110%

120%

130%

140%

150%

160%

North Carolina

Medicaid

State Budget

2007 2008 2009 2010 201180%

90%

100%

110%

120%

130%

140%

150%

160%

Arizona

State Budget

Medicaid

2007 2008 2009 2010 201180%

90%

100%

110%

120%

130%

140%

150%

160%

Virginia

2007 2008 2009 2010 201180%

90%

100%

110%

120%

130%

140%

150%

160%

Florida

Medicaid

Medicaid

State Budget

State Budget

Comparison of Yearly Growth in Medicaid Budget from 2007National Association of State Budget Officers (NASBO)

Place logohereQuestion

If North Carolina’s Medicaid growth rate is lower than other states, then why has NC had a Medicaid shortfall for the past few years?

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Forecasting Medicaid Enrollment, Utilization and Federal Revenues

63% Federal Medicaid 26% Approp’s 11% Other

61% Federal Medicaid 29% Approp’s 10% Other IMPACT: $400 Million

Total Spend $12.6 Billion

Total Spend $12.6 Billion

Federal Medicaid $ 8.0 Billion

State Appropriations 3.2 Billion

Other 1.4 Billion

Federal Medicaid $ 7.7 Billion

State Appropriations 3.6 Billion

Other 1.3 Billion

BUDGET

ACT UAL

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4 Drivers of Medicaid Spending

1. Eligibility - Who is covered2. Benefits - What services are covered3. Fees – How much is paid for

services4. Utilization – How many services are

used by the covered individuals

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CCNC’s contract with DMA restrains our

influence on only 45% of the Medicaid costs

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More about CCNC

CCNC Influences Some, BUT NOT ALL, Medicaid Services for Individuals Enrolled in CCNC

CCNC

primary carehospitals & emergency

departments

referrals tospecialists

medications

Less than 45% of total Medicaid claims spending

CCNC and its care teams have minimal influence over utilization of these services:

personal care services

nursing homes & other LTC settings

diagnostic testing

behavioral health care medical

equipment

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More about CCNC

Statewide medical home and care management system in place to address quality, utilization and cost, managed through 14 local networks, 1,800 practices & 6,000+ providers

A private sector Medicaid management solution that improves access and quality of care

Medicaid savings that are achieved in partnership with – rather than in opposition to – doctors, hospitals and other providers.

100 percent of all Medicaid savings remain in state

Recognition as a national award-winning, best-practice model

Public-private partnership

Community-based, physician-led medical homes that coordinate care across fragmented health systems

CCNC is a true clinical partnership

Ensures patients receive optimal care and avoid unnecessary hospitalizations

Participating providers are expected to improve care and have ownership of the improvement process

CCNC Provides NC with: Key Tenets of CCNC:

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Place logohereCCNC Networks

90% of all Primary Care Practices in the State 6,000 Primary Care Providers and 1800 practices 1.3 million enrolled patients Gaston and Lincoln –

58 Primary Care Practices 41,000 patients (9500 Aged and Disabled)

Statewide coverage Presence in every hospital in the state

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Place logohereLocal Networks

Support to the Primary Care Practices Health Team

Nurse Care Managers Medical Director Pharmacists and Pharmacy Assistants Behavioral Health Coordinators Consulting physicians – Psychiatrist and OB Champion Patient Care Coordinators (arrange appointments and track down

patients)

Informatics Center – health data and patient targeting capacity

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CCNC-Enrolled Members Have Lower and Declining Potentially Preventable Inpatient & ER Costs

2008 2009 2010 2011 201270%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

$8.60 PMPM$31.22 PMPM

$32.22 $32.57

$34.49

$36.10

Unenrolled

CCNC-Enrolled

The CCNC-Enrolled population has lower and declining inpatient costs while the Unenrolled population has higher and

increasing costs.

$8.60 $8.42 $8.36

$7.52

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HEDIS Quality Benchmarks: Comparing CCNC to National Medicaid MCOHEDIS = Health Effectiveness Data and Information Set

Cholesterol Control LDL < 100

Blood Pressure Control < 140/90

A1C Control < 8.0

Nephropathy Screening

Cholesterol Control LDL < 100

Blood Pressure Control < 140/90

Diab

etes

Card

iova

scul

ar D

iseas

e

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

47%

66%

61%

84%

47%

64%

35%

61%

48%

78%

42%

57%

Higher is betterfor these measures

>10,000 more North Carolinians with good diabetes

control

>11,000 more North Carolinians

with good BP control

CCNC 2012

Nat’l Medicaid MCO Mean

2011

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2 Pilot Projects that Reduce Medicaid Expenditures

Place logohereED Pilot Project

Focusing on “Frequent Flyers” to the ED ED visits for non-urgent reasons 178 Patients had 2882 visits (non-urgent)

to the ED within a 12-month period (June 2012-July 2013) – average of 16 visits per patient

Using an average cost of $350 per visit times 2882 visits = $1,008,700 cost to Medicaid

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Place logohereED Pilot

Starting with the top Frequent Flyers – average ED visits to the ED

36 times per patient CHP Nurse Care Manager with Behavioral

Health experience performs intensive interventions with the targeted patients

Early Pilot Results: ED utilization for the targeted patients reduced by 30%

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Place logohereEarly Results of ED Pilot

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ED Pilot: Medicaid Cost Savings Potential for savings to the State

Assume .43% of the enrolled CCNC Population are frequent flyers (178 patients in Gaston and Lincoln Counties is .43% of the CCNC enrolled population of 41,000 patients)

That would tell us that 5590 Medicaid and CCNC enrollees are heavy users of the ED for non-urgent reasons (over 16 visits per year)

Using the $350 as a low per visit cost to Medicaid, these 5590 patients are costing $31,304,000 per year in ED expenditures THAT COULD BE AVOIDED

A 30% reduction would mean a reduction in ED expenditures by $9,391,200 per year. The net savings would be in the range of $7.3 million per year.

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Place logoherePotential Savings to NC

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Total Cost 30% Reduction 50% Reduction $-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

Potential Medicaid Savings on ED Visits for the Top

Frequent Flyers

Mill

ions

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Medical Necessity ReviewsPilot Medicaid pays for medically necessary services

including personal care services and high-cost durable medical equipment (power wheelchairs) Service providers and patients make request for services

The physicians/practitioners sign a form documenting the medical need for the service Lack of knowledge of the Medicaid criteria; home situation of

the patients Once medical attestation form is signed – patients have right

to appeal

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Medical Necessity Reviews Pilot For the pilot program, the Medical Necessity

Review Nurse gets the referral form before the doctor signs for the service

The MNR Nurse conducts a home visit to determine if the patient has a medical need for the service; determines if a lower-cost service can be an alternative to more costly services; determines if patient has other service needs

Makes a recommendation to the doctor/practitioner about meeting the medical criteria

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Medical Necessity Reviews Pilot

Medicaid criteria for PCS established by Medicaid clinical policy

86% of the 313 referrals for PCS- patients did not meet the Medicaid criteria for the service

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PCS is not a house-

cleaning service

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Medical Necessity Reviews Pilot Cost of an hour of PCS is $13.88

If Personal Care Services are delivered three days per week for three hours per day for one year, Medicaid costs would be $6500 for one patient

300 patients would cost Medicaid about $2 million per year – average length of stay in the service is 4 years

2008 data: there were 51,000 patients on PCS at a total cost of $318 million

A 15% reduction in the program statewide would reap a savings of

• $47 million annually

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Place logohereMedical Necessity Reviews

A pilot project with 4 networks – not statewide PCS – many need the service but there is too

much room for abuse DMA has implemented several measures to

control the program but more needs to be done Change in Medicaid policies and processes are

fraught with complications – delays in state and federal approvals--policy changes take time to go through a process

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Upcoming State Discussions on Medicaid Reform

NC DHHS recommends moving Medicaid to three program structures: Physical Health – Accountable Care Organizations Mental Health and Substance Abuse- LME/MCO’s Long Term Care – new structure not yet

determined

Decisions will be made by the NC Legislature

Uncertain timeline

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