Overview of Medicaid, Expansion in Other States, and ...sfc.virginia.gov › pdf › ...meeting_presentations › 2018 › ...Medicaid GF Budget. Remaining GF Budget. Assumptions:

SENATE FINANCE COMMITTEE

May 14, 2018

Overview of Medicaid, Expansion in Other States,

and Individual Health Insurance


Financial Impact

Higher Education

Provider Assessment

Medicaid Expansion Overview

Individual Health

Insurance

Presentation Outline

2

Status in Other States

Alternative Expansion Options


Medicaid Expansion Overviewand Status in Other States

3

SENATE FINANCE COMMITTEE 4

• The Affordable Care Act provides coverage, at state option, through Medicaid to individuals age 18 to 64 with incomes up to 138 percent of the federal poverty level who otherwise are not currently eligible for Medicaid.

• Expands Medicaid to become a program for all lower income individuals.

• Mainly expands coverage to childless adults.

• Federal match rate for the first three years (2014-2016) was 100%, in 2017 it was 95%, it is currently 94% for 2018, will drop to 93% in 2019, and finally reach 90% in 2020 and beyond.

Medicaid Expansion Overview


Income Thresholds for Medicaid (With Expansion)

219%

143% 143%100%

80%48%

138%

0%

50%

100%

150%

200%

250%

Elderly andDisabled (Long-

Term Care)

PregnantWomen

Children SeriouslyMentally Ill*

Elderly andDisabled

Parents Childless Adults(Not Eligible)

Fede

ral P

over

ty L

evel

Current Medicaid Expansion Population

Medicaid Expansion Threshold Impacts These Groups

* Adults with serious mental illness are covered under the GAP waiver, which provides a limited benefit.


Current Status of State Medicaid Expansion Decisions

• 32 states and DC have opted for expansion.

• 18 states have not expanded Medicaid under the Affordable Care Act.

ACA Expansion

Expansion

No Expansion

Source: Status of State Action on the Medicaid Expansion Decision, Kaiser Family Foundation State Health Facts, January 16, 2018.


Financial Impact

7


Medicaid vs. GF Growth Rates

6.0%8.0%

13.5%

5.4% 5.7%4.6%

3.4% 6.0%

5.7% 6.0%

1.3%

-9.2%

-0.7%

5.8% 5.4% 5.3%

-1.6%

8.1%

1.7%3.6%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Medicaid Growth Rate GF Revenue Growth Rate


Medicaid’s Projected Share of GF Budget

22.3% 22.3% 22.9% 23.6% 24.2% 24.9% 25.7% 26.4% 27.2% 28.0%

$0

$5

$10

$15

$20

$25

$30

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028

Bill

ions

Medicaid GF Budget Remaining GF Budget

Assumptions: FY 2019 and FY 2020 reflect the introduced budget. FY 2021 and beyond reflect five-year prior average of 3.5% annual GF budget growth and 6.5% annual Medicaid growth.

Medicaid’s share would grow from 22% to 28% without any expansion.


Medicaid Expansion Costs and Savings -Virginia

10

Item ($ in millions) FY 2019 State Costs

FY 2020 State Costs

FY 2019 Federal

FY 2020 Federal

Coverage of Newly Eligible Adults $62.9 $200.2 929.9 2,194.5

Coverage of Woodwork (Currently Eligible) 0.9 4.9 0.9 4.9

Administrative Costs 13.5 19.8 53.3 64.9

Total Costs $80.8 $226.1 984.0 2,264.3

Indigent Care Savings (71.2) (110.3) (71.2) (110.3)

State-funded Behavioral Health Services (16.7) (25.0) - -

Inpatient Hospital Costs of State Prisoners (15.5) (23.4) - -

Elimination / Substitution of State-funded Coverage for Newly Eligible

(48.7) (111.0) (50.7) (116.4)

Total Savings (152.1) (269.7) (121.9) (226.7)


$81

$226

$273 $282

$152

$270$282 $290

$0

$50

$100

$150

$200

$250

$300

$350

FY 2019 FY 2020 FY 2021 FY 2022

Costs Savings

Medicaid Expansion - Four-Year Financial Projection

Source: Department of Medical Assistance Services – August 2017 estimates.


Alternative Medicaid Expansion Options Approved in Other States

12


•Traditional Medicaid•24 states have used this method

State Plan Amendment

Method of State Medicaid Expansions

13

•Modifies Medicaid Program•8 states have used this method1115 Waiver


States Choosing Alternative Medicaid Expansions

8 States - Expansion Alternative by Waiver

18 States -No Expansion

24 States - Expansion by State Plan

Source: National Academy for State Health Policy.


Provision Governor House Senate (Not Funded)

Proposal Expand Medicaid pursuant ACA Expand Medicaid pursuant ACAExpand existing GAP waiver to serve most vulnerable individuals

Method Expand through State Plan Amendment

Expand through State Plan Amendment and implement a waiver, if approved

Amend the existing GAP waiver

Population served 300,000 low-income non-disabled adults

300,000 low-income non-disabled adults 20,000 in GAP; 2,300 in waivers

Biennial Cost $307 million in state funds $307 million in state funds Est. cost of $273 million in state funds, when funds are available

Funding $307 million provider tax on hospitals

$307 million provider tax on hospitals General Fund

Work Requirement None

Subject to federal approval, many exceptions, verification limited, lockout period for failure to comply

None

Protection from Reduced Federal Funds

Language to disenroll if federalmatch rate for expansion population changes

Language to disenroll if federalmatch rate for expansion population changes

Existing federal match, no protection necessary

Summary of Medicaid Expansion Proposals


Elements of Alternative Medicaid Expansions Provision Description

Cost-sharing

Seven states require premium payments, typically around two percent of income and use a sliding scale. Five states disenroll individuals for failure to pay. Three states have lock-out periods as well. Indiana has a premium surcharge for tobacco users. At least one state charges higher co-pays for non-emergency use of emergency rooms.

Coverage Effective Date Five states have waived retroactive eligibility (Medicaid covers health care costs incurred 90 days prior to application).

Health Savings Accounts Two states use accounts similar to health savings accounts to help beneficiaries meet cost-sharing requirements.

Work Requirement

Four states (Kentucky, Indiana, Arkansas, and New Hampshire) have received approval. Typically, they require able-bodied recipients to work a certain number of hours per week or month or else lose their eligibility for Medicaid. One state has a grace period and some have frequent demonstrations of compliance.

Eligibility Determinations

Two states have lock-out periods for individuals that do not renew their eligibility in a timely manner.

Benefits and Healthy Behavior Incentives

Three states have eliminated the non-emergency transportation benefit. Six states promote healthy behaviors for beneficiaries that result in cost-sharing reductions when they, for example, complete a health risk assessment, annual wellness exam, etc.

Source: Kaiser Family Foundation.


Medicaid Cost Control

New York’s Global Spending Cap

Ohio’s Per Capita Limit

Health Care Cost Control

Massachusetts’ Health Policy Commission

Maryland’s All-Payer Hospital Rate Setting

Cost Control in Other States


Provider Assessment

18

HOSPITAL


Hospital Provider Assessment

• Excludes public hospitals, freestanding psychiatric and rehabilitation hospitals, children’s hospitals, long stay hospitals, long-term acute hospitals and critical access hospitals.

19

• Introduced budget and the House budget impose a provider assessment on net patient revenue of private hospitals to cover the actual costs of Medicaid Expansion.• Estimated to be a 0.5% assessment in FY 2019 and 1.4 % in FY 2020.

• The revenue would be deposited into the Health Care Fund.

Advantages• Eliminates need for GF support.• Helps to protect Virginia’s AAA rating.• Frees up all Medicaid Expansion savings for

investment in other budget areas.Disadvantages• Reduces hospital benefit from Medicaid

Expansion.• Impact varies by hospital, impacting some

more than others.


Hospital Type FY 2020 New MedicaidExpansion Revenue

FY 2020 Assessment

Fiscal Impact

All Private Acute $550.3 million $237.7 million $312.6 million

Urban $497.5 million $220.8 million $276.7 millionRural $52.8 million $16.9 million $35.9 million

UVA and VCU $164.6 million Exempt $164.6 million

Fiscal Impact on Hospitals

Note: Estimates are from the Department of Medical Assistance Services and do not take into account any loss of commercial business that would result from individuals whose coverage shifts from the federal marketplace to Medicaid. DMAS projects that 60,000 individuals will move from the federal marketplace to Medicaid as part of Medicaid Expansion.


• The Virginia Hospital and Healthcare Association continues to advocate for increasing hospital reimbursement to 88% of costs.

• Current reimbursement for inpatient services is approximately 71% and 70% for outpatient services.

• The state share would be paid through a provider assessment (in addition to the assessment to pay for the costs of Medicaid Expansion).

• Hospitals would receive net new revenue (accounting for the provider assessment to cover the state share) of $126.9 million in FY 2019 and $156.9 million in FY 2020. This is in addition to revenue received if the state chooses to expand Medicaid.

Increasing Hospital Reimbursement


Individual Health Insurance Market

22


• In response to premium rate increases for 2018 ranging from 35% to 81%, the Senate advanced several bills to increase options for affordable health insurance:

• SB 672 redefines the meaning of small employer to include self-employed individuals.

• SB 844 promotes lower-cost short-term insurance policies, pending federal regulation, that will allow such policies to be effective for up to a year.

• SB 934 and SB 935 expand availability of association health plans to allow more Virginians to participate in insurance “pools”.

• SB 964 requests a federal waiver for broader access to lower-cost ACA catastrophic plans.

• These bills are pending final action by the Governor whose amendments were rejected at the April 18, 2018 Reconvened Session (except for SB 672 which the Governor signed into law).

Senate Bills Related to Affordability in the Individual Market


• Reinsurance Program:• State can request a Section 1332 Waiver to use federal savings from implementing a Reinsurance

Program for the individual marketplace.• A reinsurance program pays a portion of high-cost claims to limit the financial exposure of the insurance

companies and thereby reduce premiums.• Similar programs in other states have reduced premiums by up to 20%.• Will require state funds to fully fund the program (could use hospital or insurance assessment to fund

the state share).

• Limit Provider Rates to Medicaid Rates:• Require providers to use the Medicaid Fee Schedule.• Would reduce claims costs of insurance companies and thereby reduce premiums in the individual

marketplace.• Providers will likely oppose as it interferes in private sector negotiations of rates between providers and

insurance companies.• May reduce rates more significantly than a reinsurance program.

Options for Affordability in the Individual Market


• Health insurers have submitted their initial rate filings to the Bureau of Insurance for the 2019 Plan Year.• The average rate change ranges from -1.9% to 64.3%.

• Anthem HealthKeepers average change is 5.6%.

• One new plan is entering the market (Virginia Premier), increasing the number of health insurers to eight for 2019.

Update on Individual Insurance Market for 2019

Documents

Overview of Medicaid, Expansion in Other States, and ...sfc.virginia.gov › pdf › ...meeting_presentations › 2018 › ...Medicaid GF Budget. Remaining GF Budget. Assumptions: