Testimony on Healthy Pennsylvania: Reforming Medicaid

January 3, 2014

Testimony of Arthur C. Evans, Jr., PhD

Philadelphia Department of Behavioral Health & Intellectual disAbility Services

Secretary Mackereth: Thank you for this opportunity to comment on the Healthy Pennsylvania plan. We applaud the administration’s willingness to address critical healthcare issues facing the Commonwealth. However, we believe that the Healthy PA plan, as proposed, would be less efficient and would produce poorer outcomes than the Commonwealth’s current successful HealthChoices Program. Further, the Healthy PA plan does not build on the successful Behavioral Health Managed Care Program that the Commonwealth initiated and has supported for over sixteen years. In particular, Pennsylvania has been a key innovator in the delivery of behavioral health services which we believe is a national model for the provision of a broad range of services and supports necessary to prevent and treat behavioral health challenges. Furthermore, Philadelphia, as a major urban center in southeastern Pennsylvania, has committed to and fostered an array of integrated physical health and behavioral health initiatives as well as prioritized services for high need populations in Philadelphia including people experiencing homelessness, children in the child welfare and juvenile justice systems, people with serious mental illness who have been discharged from the state hospital and children in the public school system. The Philadelphia Department of Behavioral Health and Intellectual disAbility Services (DBHIDS) has a long history of serving the needs of individuals and families with behavioral health challenges in a manner that is effective and efficient largely due to the current HealthChoices structure. The Healthy Pennsylvania plan would disrupt this system resulting in higher overall costs and higher unmet needs of individuals. I. Privatizing the current Medicaid system in the Commonwealth will increase costs and decrease efficiency. Evidence shows that Medicaid is a much more cost-effective system than the private health insurance industry. Kaiser Family Foundation reports that costs per enrollee are lower under Medicaid than they are under employer sponsored coverage.1 In Philadelphia, the HealthChoices behavioral health administrative agency, Community Behavioral Health (CBH), has consistently kept administrative spending under 6.5%, far below the average spending within private and employer-based health insurance. Administering benefits

1 Kaiser Commission on Medicaid and the Uninsured, What Difference Does Medicaid Make? (May 2013). Available at: http://kaiserfamilyfoundation.files.wordpress.com/2013/05/8440-what-difference-does-medicaid-make2.pdf.

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through the existing Medicaid system is a better investment for Pennsylvania citizens than through the private health insurance industry. I urge that the Commonwealth maintains and strengthens the current Medicaid system in the state rather than dismantle it in favor of a more costly, less efficient private system. II. The Medicaid reforms proposed in Healthy Pennsylvania will result in higher costs overall due to limiting access to necessary services and by narrowing the scope of benefits offered. In order to contain healthcare costs it is critical that we meet the needs of individuals with behavioral health challenges. In 2007, 12 million emergency room visits involved a diagnosis related to mental health or substance use.2 In order to prevent costly emergency room visits and hospitalizations, it is crucial that we provide comprehensive services including prevention and treatment to those with behavioral health challenges. Access to Medicaid is critical for individuals with disabilities and low-income individuals with behavioral health needs because, according to Kaiser Family Foundation, “Medicaid’s behavioral health benefits are generally more comprehensive than those offered by other payers, and in some cases, Medicaid is the only insurer that covers a service needed by those with behavioral health problems.”3 This statement accurately reflects coverage in Pennsylvania. The Healthy Pennsylvania proposal to consolidate the existing Medicaid benefit plans into two alternative benefit plans (ABP) will limit access to necessary services and treatment for individuals, especially those with behavioral health challenges. We have grave concerns with the proposed benefit limits for the ABPs including:

A 30 day per year limit on inpatient psychiatric hospitalization and inpatient drug and alcohol treatment for individuals in the low-risk plan; 45 days for individuals in the high-risk plan;

A 30 day per year limit on outpatient mental health treatment and outpatient drug and alcohol treatment for individuals in the low-risk plan; 45 days for the high-risk plan;

Limiting prescription clozapine to only individuals with a diagnosis of schizophrenia Limiting psychiatric partial hospital to 540 hours per year; Limiting peer support services to 4 hours per day or 900 hours per year; Failing to provide targeted case management except for individuals with a diagnosis

of serious mental illness that are in the high-risk plan; and

2 Owens P.L., Mutter R., Stocks C. Mental Health and Substance Abuse-Related Emergency Department Visits among Adults, 2007. HCUP Statistical Brief #92. July 2010. Agency for Healthcare Research and Quality, Rockville, MD. http://www.hcupus.ahrq.gov/reports/statbriefs/sb92.pdf 3 Kaiser Family Foundation, Kaiser Commission on Key Facts, Medicaid and the Uninsured, The Role of Medicaid for People with Behavioral Health Conditions (November 2012). Available at: http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8383_bhc.pdf.

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Limiting laboratory services to $250 per year for the low-risk plan; $350 per year for the high-risk plan.

It is estimated that 5.8% of individuals that will be newly eligible for Medicaid in Pennsylvania will have a serious mental illness; 14.1% will have psychological distress; and 16.4% will have a substance use challenge.4 These individuals will be best served by the existing behavioral health Medicaid system in place. Currently Philadelphia’s HealthChoices Program offers a comprehensive range of cost-effective services providing coverage that meets individuals’ needs. Reducing the scope of coverage to reflect “commercial-like” coverage will limit access to necessary services and treatment critical for individuals to remain healthy in the community. III. The proposed cost-containment strategies in Healthy Pennsylvania will not effectively reduce costs and will act as unnecessary barriers to care. The cost-neutrality requirement of the Healthy Pennsylvania plan seems to rest on controversial provisions including monthly premiums, work search activities, a co-payment for inappropriate emergency room usage, and punitive measures for noncompliance. We firmly believe that these requirements will not assist in obtaining their intended goals of increasing accountability and containing costs, but will instead act as significant barriers to services and treatment. This will indeed lead to greater utilization of emergency services and hospitalizations thus driving up costs. Specifically we recommend: A. Eliminating the proposed monthly premium requirement.

The Healthy PA plan proposes to attach a monthly premium to Medicaid benefits applying to individuals with incomes as low as 50% of the Federal Poverty Level ($5,745/year). The federal government has refused to approve cost-sharing requirements as stringent as this in other state’s Alternative Benefit Plans. The practical consequences of such premiums will far outweigh the perceived cost benefits. While $25 per month does not seem like much money to individuals who have steady incomes, for low-income individuals, it will act as a significant barrier to coverage and care forcing them to choose between basic life necessities and health coverage.

B. Eliminating the proposed work search requirements.

Currently, no other state in the nation applies a work requirement to its Medicaid benefit. We believe that Hypothesis 2.2 of the Healthy Pennsylvania plan stating, “Encouraging work search activities will promote employment, which will result in

4 Sources: 2008 - 2010 National Survey on Drug Use and Health (Revised March 2012). 2010 American Community Survey.

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better physical and mental health outcomes” is deeply flawed. Requiring stringent work search requirements will act as a substantial barrier to accessing care.

Specific questions with regard to the work search requirement remain including:

o Would the requirement apply to individuals with behavioral health disabilities who are otherwise “able-bodied”?

o Who will determine when exemptions are awarded and what criteria will be used to make these decisions?

C. Eliminating the $10 co-payment for “inappropriate” emergency room use.

Individuals and families who might be experiencing serious medical conditions could delay seeking emergency treatment due to this co-payment. The Emergency Medical Treatment and Labor Act (EMTALA) was enacted to ensure all individuals had access to necessary health services in times of crises regardless of ability to pay. Enacting a policy such as this can confuse individuals about their right to receive care in these settings, and unjustifiably penalizes people with low incomes.

D. Eliminating the penalties imposed when individuals fail to pay monthly premiums.

Imposing punitive measures such as eliminating coverage when individuals fail to pay a monthly premium will disrupt care and lead to crisis situations thus increasing overall costs for care.

IV. Pennsylvania should expand Medicaid eligibility utilizing the existing HealthChoices system in the Commonwealth. The Affordable Care Act (ACA) offers an unprecedented opportunity to provide comprehensive health coverage to hundreds of thousands of Pennsylvanians. By delaying expansion until January 1, 2015, Pennsylvania stands to lose 2.5 billion dollars of federal funding.5 Each day the Commonwealth fails to act on this opportunity, our most vulnerable residents go without access to necessary services and treatment. Respectfully submitted, Arthur C. Evans, Jr., PhD Commissioner, Philadelphia Department of Behavioral Health & Intellectual disAbility Services

5 For States that Opt Out of Medicaid Expansion: A Rand Report.” Health Affairs. Available at http://www.rand.org/pubs/external_publications/EP50279.html