Upload
lethu
View
220
Download
7
Embed Size (px)
Citation preview
SENATE FINANCE COMMITTEE
SENATE OF VIRGINIA
Senate Finance Committee
November 17, 2017
Trends in Virginia Medicaid and Opportunities to Shift the Cost Curve
SENATE FINANCE COMMITTEE 2
Presentation Overview
Medicaid Pressure on the State Budget
Overview of Virginia Medicaid
Medicaid Impact, Trends, Cost Drivers and the 2017 Forecast
Update on Medicaid Reforms
Medicaid Redesign and Innovations
SENATE FINANCE COMMITTEE
Medicaid Pressure on the State Budget
3
SENATE FINANCE COMMITTEE 4
Medicaid’s Share of the State Budget Has Grown
K-12 Education
36%
Higher Education
19% Medicaid
6%
Public Safety
9%
All Other 30%
FY 1985 Percent of General Budget by Major Area
Source: Chapter 221, 1986 Acts of Assembly and Chapter 836, 2017 Acts of Assembly.
K-12 Education
30%
Higher Education
10%
Medicaid 23%
Public Safety
9%
All Other 28%
FY 2018
SENATE FINANCE COMMITTEE 5
Medicaid’s Growth Outpaces GF Revenue Growth Over the Long-Term
Note: Expenditures in FY 2011, FY 2012, FY 2015 and FY 2016 have been adjusted to reflect payment shifts between fiscal years in order to better reflect realistic expenditure patterns in the program.
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%
-15.0%
-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 General Fund Revenue
Avg. Medicaid Growth of 6.4% versus 2.0% for GF Revenue
SENATE FINANCE COMMITTEE
4 agencies with the highest growth amount in general fund appropriations, FY08-FY17($M)
6
Medicaid has Largest Share of GF Growth
Agency FY 2008 FY 2017 GF Growth GF %
Growth % of Total
GF Growth
DMAS $2,567.2 $4,450.9 $1,883.7 73% 60%
Treasury Board 405.2 722.1 316.9 78 10
DBHDS 535.7 749.1 213.4 40 7
DOC 961.7 1129.4 167.7 17 5
Source: Adapted from JLARC’s Report “State Spending: 2017 Update, October 2017”.
SENATE FINANCE COMMITTEE 7
• Relative to the overall state budget there are at least three ways to handle the issue: 1) Increase state revenues to fund other priorities, 2) Increase economic growth such that GF revenues at least match
Medicaid’s growth, and 3) Slow the growth of the Medicaid program.
• Otherwise, Medicaid’s share of the general fund budget will continue to grow, further limiting funding for other areas such as education.
• What can Virginia do to limit Medicaid’s growth?
The State Budget Issue: Medicaid
SENATE FINANCE COMMITTEE
Overview of Virginia Medicaid
8
SENATE FINANCE COMMITTEE 9
• Medicaid is a shared state/federal program to provide health insurance for certain low-income groups.
• Medicaid is essentially four programs: • Health insurance for low-income parents and children; • An insurance supplement for low-income seniors on Medicare; • Health insurance for low-income disabled individuals; and • A long-term care program for elderly and disabled individuals.
• Federal funds for the program are based on a state’s personal income, essentially a state’s ability to pay.
Medicaid is a Safety Net Program
SENATE FINANCE COMMITTEE 10
Federal Match Rates Vary From 50% to 75.65%
Virginia 50%
Mississippi 75.65%
Source: Kaiser Family Foundation.
SENATE FINANCE COMMITTEE 11
40%
18% 9%
8%
6% 6%
14%
FY 2017 Expenditures (Total Funds)*
Managed Care
Waiver Services
Nursing Facilities
Mental Health
Hospital Services
Medicare Premiuims
All Other
$9.2 billion
FY 2017 Spending by Service and Enrollment
* Does not include payments to state facilities operated by the Department of Behavioral Health and Developmental Services.
Aged, Blind and
Disabled 27%
Children 47%
Pregnant Women
2%
Low-Income Adults 24%
November 1, 2017 Enrollment = 1,045,465
Note: Half of the low-income adults are only eligible for the limited benefit family planning program (Plan First).
SENATE FINANCE COMMITTEE 12
Income Thresholds for Medicaid Vary by Group
219%
143% 143% 100%
80% 48%
0% 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
Medicaid Children's Health Insurance Program
* Adults with serious mental illness are covered under the GAP waiver, which provides a limited benefit.
SENATE FINANCE COMMITTEE 13
Adults and Pregnant Women
Adults and Pregnant Women
Children
Children
Aged, Blind and Disabled
Aged, Blind and Disabled
0%10%20%30%40%50%60%70%80%90%
100%
Expenditures Enrollees
FY 2017 Medicaid Expenditures versus Enrollees
24%
68%
Aged, Blind and Disabled are the Highest Cost
Source: FY 2017 DMAS Databook.
Avg. Annual Cost
$22,026
Avg. Annual Cost
$3,784
SENATE FINANCE COMMITTEE 14
• Medicaid is not like Medicare, which is a federal program that provides national health insurance to all Americans, regardless of income, beginning at age 65.
• The Affordable Care Act (ACA) directed states to expand Medicaid (with an enhanced federal matching rate) to increase health care coverage to lower-income individuals.
• Essentially, the ACA changed the nature of Medicaid to national health insurance as opposed to a safety net program for vulnerable populations, which is partly the reason Medicaid Expansion has been debated since the ACA passed.
• The Supreme Court decision resulted in a choice for states. Is the goal of the Medicaid program:
• Caring for only the neediest citizens, or
• A broader health insurance program for all low-income individuals.
Affordable Care Act Changed Medicaid
SENATE FINANCE COMMITTEE
Medicaid Impact, Trends, Cost Drivers and 2017 Forecast
15
SENATE FINANCE COMMITTEE
1 in 8 Virginians rely on Medicaid
Medicaid is the primary payer for behavioral
health services
Medicaid covers 1 in 3 births in Virginia
33% of children in Virginia are covered by
Medicaid & CHIP
2 in 3 nursing facility residents are supported by
Medicaid
62% of long-term services and support spending is in
the community
Medicaid is a Vital Part of the Safety Net
16
SENATE FINANCE COMMITTEE 17
$5.3
$9.4
6.0%
8.0%
13.5%
5.4% 5.7% 4.6%
3.4%
6.0% 5.7% 6.0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Bill
ions
Expenditures Percent Growth
Expenditures Impacted by the Economy
Note: Expenditures in FY 2011, FY 2012, FY 2015 and FY 2016 have been adjusted to reflect payment shifts between fiscal years in order to better reflect realistic expenditure patterns in the program.
10 Year Avg. =6.4%
SENATE FINANCE COMMITTEE 18
Enrollment and Utilization
Inflation
State and Federal Policy Changes
Three Primary Drivers of Medicaid
SENATE FINANCE COMMITTEE 19
226 232 240 249 257 263 266 270 275 279
434 463 524 555 578 615 623 667 716 732
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tho
usan
ds
Fiscal Year Aged, Blind or Disabled Adults and Children
Medicaid Enrollment Trends Medicaid enrollment has grown 53% since FY 2008
Average growth per year = 4.5% Over 1.0 million
Source: Staff analysis of DMAS data.
SENATE FINANCE COMMITTEE 20
4.1% 4.7%
4.4% 4.4%
3.2% 3.7%
2.4%
3.8%
2.8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Medical Inflation Remains Historically Low • Medical inflation averaged 4.3 percent prior to 2008 and since then
has averaged 3.1 percent.
Source: Bureau of Labor Statistics, CPI – Medical Care. * 2017 reflects first nine months only.
Recessionary Period
SENATE FINANCE COMMITTEE
2017 Medicaid Forecast Reflects Moderate Growth
• FY 2018 requires additional funding of $86 million GF.
• The 2018-20 Biennial GF Forecast Need is $583 million GF.
• State spending is projected to increase:
• 6.5% in FY 2018;
• 2.3% in FY 2019; and
• 3.4% in FY 2020.
• Each 1% equals $100 million GF.
21
$4,917 $4,917 $4,917
$86 $199
$384
$4,000
$4,200
$4,400
$4,600
$4,800
$5,000
$5,200
$5,400
FY 2018 FY 2019 FY 2020
Mill
ions
November 2017 Medicaid Forecast
(Dollars in Millions)
Base Appropriation Forecast Need
21
SENATE FINANCE COMMITTEE
• Enrollment: • Aged, blind and disabled are increasing 1.4% while children are at 1.0%. • Increase in low-income adults of 7.5% in FY 2018.
• Managed care changes: • Savings from the expansion of managed care. • Rate increases up to 3.8% across the two managed care programs.
22
• Hospital and nursing home inflation as required by regulation.
2017 Forecast Drivers
Provider FY 2019 FY 2020
Inpatient Hospital 2.8% $21.9 million GF
3.0% $48.3 million GF
Nursing Homes 2.9% $10.9 million GF
3.0% $23.4 million GF
SENATE FINANCE COMMITTEE 23
Managed Care Rates Have a Significant Impact • Adding long-term care and behavioral
health services to managed care shifts one-third of total program expenditures by FY 2020.
• Managed care rates assume savings in behavioral health and consumer-directed services.
• DMAS’s actuary has used aggressive savings assumptions which will require close monitoring.
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
FY 2017 FY 2018 FY 2019 FY 2020
Bill
ions
Expenditures by Delivery System
MCO Payments Fee-for-Services
MCO’s at 67% of total
SENATE FINANCE COMMITTEE 24
Out-Years Difficult to Forecast • Medicaid forecast provides an estimate
for 3 years at a time.
• Forecast models tend to taper trends over time.
• The 2017 forecast includes the current fiscal year 2018, and the next biennial budget (FY 2019 and FY 2020).
• Result is typically a funding need in the amended budget.
2.9%
4.3%
7.8%
2015 2016 2017Forecast
Growth Rate for FY 2018 Across Forecasts
SENATE FINANCE COMMITTEE
Update on Medicaid Reforms
25
SENATE FINANCE COMMITTEE 26
Status of 2013 Medicaid Reforms
Coordinated Service Delivery
Dual Eligible Demonstration Pilot Foster Care Behavioral Health Commercial-like Benefit Package Limited Provider Networks and Medical Homes ID/DD Waiver Design All Non-Medicare EDCD Waiver Enrollees in Managed Care for Medical Needs All Inclusive Coordinated Care for Long Term Care Beneficiaries
Implemented Medicare-Medicaid Enrollee Financial Alignment demonstration (Commonwealth Coordinated Care) Implemented inclusion of children enrolled in foster care in managed care Expedited the tightening of regulatory standards, services limits, provider qualification, and licensure requirements for community behavioral health services Changed services and benefits to be the types of services and benefits provided by commercial insurers in managed care where feasible Implemented changes to support beneficiaries receipt of higher quality coordinated care through a limited network arrangement in Northern Virginia Implementing the redesign of the ID/DD waiver to provide more comprehensive and targeted service options Implemented changes and EDCD waiver enrollees are covered by health plans for medical needs (HAP) Implementing Commonwealth Coordinated Care Plus (CCC Plus) Implemented Commonwealth Coordinated Care and Initiated transition of all non-dual waiver recipients into managed care Implementing Commonwealth Coordinated Care Plus (CCC Plus)
Results Medicaid Reforms Accomplishment
Medicaid reforms outlined in the 2013 Appropriation Act:
SENATE FINANCE COMMITTEE
Results Medicaid Reforms Accomplishment
Efficient Administration
Enhanced Program Integrity eHHR Coordinate Behavioral Health Quality Payment Incentives Parameters to Test Innovative Models
Enhanced Recovery Audit Contracting (RAC), data mining, service authorization, coordination with Medicaid Fraud Control Unit (MFCU), and Payment Error Rate Measure (PERM) Implemented new eligibility and enrollment information system for Medicaid and other social services Aligned and coordinated behavioral health services through the behavioral health services administrator (BHSA); implemented behavioral health homes Implemented financial incentives and high quality outcomes through the Medallion Care System Partnership and alternative payment methods to encourage accountability within the Medicaid provider and MCO program Implemented over 100 quality measures to evaluate pilot innovations such as behavioral health homes and streamlined care transitions. Payment withhold based on attainment of quality indicators
Beneficiary Engagement
Cost Sharing and Wellness
Developed programs to incent enrollee participation in health and wellness activities to improve health and control costs in managed care; increased patient responsibility by reinstating copayments for FAMIS
Status of 2013 Medicaid Reforms (con’t)
27
SENATE FINANCE COMMITTEE 28
JLARC Recommendations are being Implemented
Recommended efforts to improve reliability for children; training and screening; ensure timely screening; and strengthen oversight of the process.
Long-Term Care Needs Assessment Instrument
Adjust rates to account for expected savings; allow negative historical trends to carry forward; rebase administrative rates for enrollment changes and deduct unallowable administrative expenses. Managed Care Rates
Require detailed MCO financial and utilization reporting; control of related party spending; excessive related party spending is not included in capitation; and underwriting gain returns above three percent.
Financial Oversight
Administer compliance review and sanctions, report on MCO performance and incentivize MCO performance improvement. Strengthen oversight of behavioral health and LTSS service delivery. Programs
Monitor MCO spending and utilization trends and analyze what is driving those trends. To include: identifying inefficiencies and adjusting rates and monitoring MCO utilization control methods. Trend Impact
Submit for CMS review, a proposal requiring cost-sharing based on family income for LTSS eligible individuals eligible through the optional 300 percent of SSI. Policy
Note: These recommendations are from JLARC’s December 2016 report “Managing Spending in Virginia's Medicaid Program”.
SENATE FINANCE COMMITTEE 29
87,821 148,995
246,594
347,350
407,346
510,352
625,373 660,026
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
Managed Care Enrollment FY 1998 – FY 2017
Shift to Managed Care Continues
Note: Data does not reflect enrollment in the Commonwealth Coordinated Care (CCC) program. Source: SFC Staff analysis.
74% of Current
Total Enrollment
SENATE FINANCE COMMITTEE 30
Managed Care Transition Nearly Complete
Births, vaccinations, well visits, sick visits, acute care, pharmacy
Incorporating community mental health
Serving infants, children, pregnant women, parents
760,000 individuals
New procurement 2017 Building on prior experience Implement statewide 2018
Medallion 4.0 CCC Plus
Long-term services and supports in the community and facility-based, acute care, pharmacy
Incorporating community mental health
Serving older adults and disabled Includes Medicaid-Medicare eligible 216,000 individuals
Implementation started Aug 2017 Implement statewide by Jan 2018
Contract value approximately $30B over 5 years
Contract value estimated at $10B - $15B over 5 years
SENATE FINANCE COMMITTEE 31
• Provides a more coordinated delivery system.
• Passes some financial risk to private health insurance companies.
• Managed Care is limited by Medicaid’s design: • Lack of recipient cost sharing; • Recipient turnover; • Few incentives to promote healthy behaviors; and • Difficult to address social determinants of health.
Does Managed Care Solve the Budget Problem?
SENATE FINANCE COMMITTEE 32
Not in State’s Control State Control
Cost of Services Provider Reimbursement Rates
Demographics Program Benefits
Federal Match Rate Eligibility
State Revenue
What Control Does the State Have?
SENATE FINANCE COMMITTEE
Medicaid Redesign and Innovation
33
SENATE FINANCE COMMITTEE 34
State Options to Consider
Waivers
Value-Based Payment
Administrative Controls
SENATE FINANCE COMMITTEE 35
Redesign Must be Broader than Clinical Care
Focus must be broader than just medical
care
SENATE FINANCE COMMITTEE 36
• Section 1115 of the Social Security Act allows the Secretary of Health and Human Services to approve demonstrations.
• Allows a waiver of statutory Medicaid requirements.
• Must be budget neutral to the federal government.
• Approval for up to five years.
• Waivers allow states to innovate.
Waivers Provide State Flexibility
SENATE FINANCE COMMITTEE 37
Two States have Global Medicaid Waivers
• Rhode Island was approved in 2009 for a waiver of their entire Medicaid program.
• Aggregate federal budget cap over five years.
• Vermont was approved in 2005. • New payment mechanisms. • Non-traditional Medicaid services. • Investments in programmatic innovations.
SENATE FINANCE COMMITTEE 38
Provision States Premium assistance AR, IA, IN, MI, NH Premiums / Monthly contributions AR, AZ, IA, IN, MI, MT Healthy behavior incentives AZ, IA, IN, MI Waive required benefits IA, IN Waive reasonable promptness IN Waive retroactive eligibility AR, IN, NH Co-payments above statutory limits IN 12-month continuous eligibility MT
Other Approved State Waiver Provisions
Source: Kaiser Family Foundation Issue Brief (August 2017).
SENATE FINANCE COMMITTEE 39
Provision States Work requirement AR, AZ, IN, KY Time limit on coverage AZ Limit expansion eligibility to 100% with enhanced match AR Monthly income verification and renewals AZ Lock-out for failure to timely renew eligibility IN, KY Tobacco surcharge IN
Pending State Waiver Provisions
Source: Kaiser Family Foundation Issue Brief (August 2017).
SENATE FINANCE COMMITTEE 40
• Waiver of Affordable Care Act Provisions: • Not a Medicaid waiver;
• Began January 1, 2017;
• State can waive essential benefits, cost sharing, and eliminate the employer and individual mandates;
• Waiver must cover similar number of residents, similar level of benefits, and be at least as affordable; and
• Cannot increase the federal deficit.
State Innovation Waivers (Section 1332)
SENATE FINANCE COMMITTEE 41
State Activity on Section 1332 Waivers
Source: Robert Wood Johnson Foundation
Approved Pending Withdrawn Applying Legislation Legislation Vetoed
SENATE FINANCE COMMITTEE 42
Status of Section 1332 Waivers
State Proposal Status
Alaska Use federal pass through funding for state’s reinsurance program. Approved
California Allow undocumented immigrants to purchase coverage through the state’s marketplace without premium subsidies.
Withdrawn
Hawaii Retain the employer coverage provisions currently in place through the state’s Prepaid Health Care Act, which was enacted in 1974.
Approved
Iowa Create a Proposed Stopgap Measure plan that would be the only plan offered in the marketplace.
Withdrawn
Minnesota Create a new state reinsurance program. Approved
Oklahoma Create a new state reinsurance program. Withdrawn
Oregon Create a new state reinsurance program. Approved
States have focused on stabilizing the exchange market
Source: State Health Reform Assistance Network, Robert Wood Johnson Foundation.
SENATE FINANCE COMMITTEE 43
• Referred to as the “Super Waiver”.
• A combined Affordable Care Act and Medicaid waiver could:
• Improve coordination of health insurance across programs;
• Improve premium subsidies and cost sharing; and
• Better align eligibility rules across programs.
Combining the 1115 and 1332 Waivers
SENATE FINANCE COMMITTEE 44
• Virginia should consider establishing a Medicaid Redesign Initiative.
• Overseen by a team from the executive and legislative branches which includes health policy experts.
• Evaluate opportunities for a Global waiver or other 1115 Waivers.
• Consider enhancements to the GAP waiver as a vehicle for broader redesign of the program.
• Focus redesign on integration of medical and behavioral health.
• Explore opportunities to fund initiatives to address the social determinants of health and improve the overall health of the Medicaid population.
Redesign of Virginia’s Medicaid Program
SENATE FINANCE COMMITTEE 45
• Not based on volume.
• Use of quality measures.
• Data and analytics are critical.
• Virginia should promote new value-based payment models through Managed Care contracts.
Other Options: Moving Toward Value-Based Payment
Value
Quality
Accountability Transparency
SENATE FINANCE COMMITTEE 46
• Legislative Oversight Committee: • Ohio legislature’s response to Governor's expansion of Medicaid.
• Uses an actuary to establish a limit on the growth in per member per month costs.
• Governor must observe limits in his/her proposed budget. • Global Spending Cap:
• New York implemented in 2012.
• Limits Medicaid spending to 10-year rolling average of medical inflation.
• Monthly monitoring to intervene, if spending is on track to exceed cap.
Use of Administrative Fiscal Controls
SENATE FINANCE COMMITTEE 47
• Virginia should consider developing target spending levels for Medicaid.
• Monthly monitoring of Medicaid spending.
• Early warning assessment of higher than expected growth.
• Development of proposals to address higher growth.
• Oversight of the Medicaid forecasting and Managed Care rate setting processes should increase.
• Enhance capabilities of agencies in consensus forecasting process.
• Use an independent actuary to evaluate assumptions and rates.
Other Options: Improving Administrative Controls
SENATE FINANCE COMMITTEE 48
Key Takeaways • Medicaid’s share of the budget will continue to grow
absent changes to the current program.
• Managed Care is a major improvement.
• Waivers provide more flexibility to redesign Medicaid.
• Virginia needs to place a greater focus on health outcomes in the program.
• Oversight and monitoring are essential to managing the growth of the program.
SENATE FINANCE COMMITTEE
Appendix
49
SENATE FINANCE COMMITTEE 50
Four Primary Groups are Eligible for Medicaid
Group Financial Requirements Non-Financial Asset Limits
Children 143% of Poverty Citizenship and Residency None
Pregnant Women
143% of Poverty Citizenship and Residency None
Aged, Blind or Disabled
80% of Poverty or 300% of SSI for Long-Term Care*
Citizenship and Residency
$2,000 Individual / $3,000 Married
Low-Income Parents
24-48% of Poverty Citizenship and Residency None
* Supplemental Security Income (SSI) is $733 per month for an individual.
2017 Federal Poverty Limits
Family Size 80% 100% 133% 200% 1 $9,648 $12,060 $16,040 $24,120 4 $19,680 $24,600 $32,712 $49,200
Source: SFC staff analysis.
SENATE FINANCE COMMITTEE 51
Virginia Medicaid Services
* The Medicare Savings Program is also mandated and requires the state to pay Medicare premiums and deductibles for certain lower-income elderly beneficiaries.
Cost Sharing Bullets
Federally Mandated Services* Optional Services
Inpatient and Outpatient Hospital Other Clinics (i.e. ambulatory surgical centers)
Physician Other Practitioners (i.e. Optometry)
Lab, Imaging and Screening Dental for Children
Community Health Centers Rehabilitation Services
Rural Health Clinics Prescription Drugs
Home Health Prosthetic Devices
Family Planning Hospice
Nurse-midwife Community Mental Health/Clinics/Clinical Psychologist
Nursing Facility Intellectual Disability Services
Transportation Inpatient Psychiatric for Children
Home and Community-Based Waivers
Source: SFC staff analysis.
SENATE FINANCE COMMITTEE 52
Status of State Medicaid Expansion Decisions
18 States are not expanding 25 are expanding 7 states are using an alternative to traditional Medicaid expansion
Source: National Academy for State Health Policy.