Medicaid’s Changing Role

Donna FolkemerNational Conference of State

LegislaturesJune 30, 2006

Underpinnings for State Action

• Medicaid covers about 55 million people, compared to less than 45 million in Medicare.

• Medicaid expenditures are outpacing state revenues so program always gets budget and program attention.

• Medicaid serves a diverse population, so there are lots of different needs and lots of moving parts in the program.

Underpinnings for State Action

• Declines in employer-sponsored insurance coverage mean states have larger role in preserving number of insured.

• The federal government, through DRA, is supportive of state experimentation with changing benefit designs, (especially benchmark packages), increasing consumer responsibility, and increasing cost-sharing.

• DRA gives states new opportunities to provide long-term care in community settings.

Medicaid’s Changing Role

Changing Role in Covering Uninsured

Changing Role in Medicaid Coverage: New Benefit Packages and Cost-Sharing

Changing Roles in Long Term Care

Medicaid’s Changing Role in Covering Uninsured

• Comprehensive approaches in MA and VT this year with Medicaid playing a key role but not only role.

• In MA, Medicaid eligibility for children increased to 300% of poverty, expands Insurance Partnership program for low-income employees to 300% of poverty, restores health benefits such as dental and vision coverage, and uses uncompensated care pool as funding source. Combined with employer fees, individual mandate for those who can afford, market reforms, and Health Insurance Connector.

Coverage of Uninsured

• Vermont Catamount Health• Chronic disease management within Medicaid

and new coverage program.• New comprehensive product for uninsured with

sliding scale premiums. Funding from employer assessment, cigarette tax and individual premiums, possibly getting federal Medicaid matching funds. Premium assistance for persons with access to employer sponsored insurance.

Medicaid’s Changing Role in Covering Uninsured

• Support for Low-Wage Workers– New programs to provide Medicaid payments, along

with payments by the individual and employers, for low-wage workers in Arkansas, New Mexico, and Oklahoma. Non-traditional Medicaid population.

• Illinois All Kids. – Medicaid eligibility increased for parents (up to 133%

of poverty) and children (up to 200%). State funds supports higher income children.

Benefit Packages and Cost-Sharing

Elements of recently approved proposals

• Tailored benefit packages– Kentucky, Idaho, West Virginia

• Insurance premium defined contribution– Florida

• Enhanced benefits accounts– Florida, West Virginia, Kentucky, Idaho

• Private insurance opt-out– Florida, Kentucky

Adapted from presentation by Lewin Group, 6.13.06

Tailored Benefit Packages

• Variation in benefit packages across groups or geographic areas.

• Three different packages in Idaho and four in Kentucky by population group. Two packages in West Virginia based on whether sign member agreement and comply with medical requirements.

Insurance Premium Defined Contribution

• Risk-adjusted monthly amount to use to choose among different insurance packages.

• Insurance plans may offer different service packages.

Enhanced Benefits Accounts

• Financial credits for certain behaviors.

• Use credits for specified non-covered services.

• May retain some credits after Medicaid eligibility ends.

Private Insurance Opt-Outs

• Individual may choose to enroll in private insurance plan. State subsidizes premium.

• If plan less generous than Medicaid, state will not provide wrap-around. Individual responsible for cost-sharing or for premiums beyond Medicaid payment.

• Up next, Health Opportunity Accounts.

• Ten states can take part in a 5 year demonstration.

• State contributes to a HOA for each person to pay for annual deductible.

• Individual purchases services from providers.

Changing Roles in Long Term Care: DRA provisions

• Home and Community Based Services State Plan Option

• Self-Determined Personal Assistance Services State Plan Option

• Assets Transfer Changes• Long Term Care Partnerships Expansion• Money Follows the Person Demonstration• Family Opportunity Act for Children with

Disabilities

Home and Community-Based Services State Plan Option

• HCBS State Plan Option (1/1/07)– States may choose to cover certain home and

community based services without a waiver.– Coverage limited to specific list of services. – Services can be made available on a less-

than-statewide basis.– State can limit number of persons served.

HCBS State Plan Option

• Income limit is 150% of poverty ($1225/mo. In 2006 for individual)

• State must establish less stringent needs-based criteria than institutional level of care criteria.

• Must be individual evaluation and assessment and plan of care.

• State may require cost-sharing.• Guidance and regs later this year.

More on HCBS state plan option

• CRS report of May 26, 2006 says: “It is too soon to determine how many states will choose to cover this new Medicaid benefit, how the new benefit will be designed, and how this option will be used relative to existing home and community-based services. …. states that currently do not cover personal care may use the new HCBS option to cover personal care, since enrollment under this new benefit can be capped. Other states may use this benefit to provide services to individuals who generally do not receive HCBS waiver services, such as individuals with severe and persistent mental illness. “

Self-Directed Personal Assistance Services Plan Option

• State may provide for self-direction of services without needing a waiver.

• State proposal must include basic consumer protections similar to Cash and Counseling.

• Self-directed services may not be provided in a service setting operated by a non-relative.

• Statewideness and comparability not required. • Effective January 1, 2007.

Self-Directed Services Option

• Requires assessment and counseling prior to enrollment and assurance individuals can manage their budget.

• Can be used to hire individuals, including relatives, or to acquire items that increase independence.

• Budget must be developed based on assessment and on a methodology that uses valid cost data and is open to public inspection.

• A state may employ a financial management entity to make payments to providers, track costs, and make reports.

Long Term Care Partnerships

• Permits new Partnership programs.

• Private policies sold through Partnerships must meet certain standards.

• Requires DHHS to develop standards for recognition of partnership policies across states.

• Establishes a Clearinghouse for Long-Term Care Information.

Asset Transfer Changes

• Changes are mandatory for states.• Look-back for transfers extended to 5 years.• Start of penalty period changed to date of

Medicaid eligibility.• Requires disclosure of annunities and naming of

state as beneficiary. • Excludes coverage for individuals with home

equity in excess of $500,000 (or $750,000 at state option).

• Provides for hardship waiver under certain circumstances.

Money Follows the Person Demonstration

• Grants to states with incentive of increased federal match for twelve months following institutional discharge.

• States would be required to continue to provide hcbs after twelve month period at regular match rate.

• Eligible persons must have been institutional residents for at least six months.

• Funds appropriated for 2007-2011.

Final Thoughts

Medicaid reform occurring in many contexts.Process of reform is important and stakeholder

involvement is essential. Important to develop goals for reform and ways to

measure achievement of those goals in each context.

Increasing access to coverage.Responding to consumer preferences.Assuring appropriate range of services.Getting good value for dollars spent.